Trump's Iran Deal Eases Inflation Fears, Gold Prices Rise

Gold prices rose on Monday as oil plummeted after US President Donald Trump announced he wouldn't launch a fresh attack on Iran, easing concerns about inflation and higher interest rates.

The spot gold price increased by 0.7% to $4,067.06 per ounce, while U.S. gold futures also rose 0.9% to $4,065.60.

This comes after Trump said that Iran and other Middle Eastern countries had asked for time to complete a deal that would lead to the reopening of the Strait of Hormuz and an end to Iran's nuclear threat.

Gold has been under pressure since the start of the US-Iran conflict, as a war-driven rise in inflation could prompt central banks to raise interest rates. However, gold is traditionally seen as a hedge against inflation, but its appeal diminishes in a high-interest-rate environment because it does not yield interest.

Three Federal Reserve officials who dissented at last week's policy meeting expressed concern that without an immediate increase in short-term borrowing costs, inflation will stay stuck above the Fed's 2% target.