Gold Prices Rise on Easing Geopolitical Tensions, But Gains May Be Limited

Gold prices have rebounded in response to easing geopolitical tensions and a weaker US dollar. However, investors remain cautious due to ongoing uncertainty surrounding global trade. According to Manav Modi, Senior Analyst at Motilal Oswal Financial Services Ltd, the gains are likely to be limited ahead of the US Federal Reserve's policy meeting this week.

The temporary pause in hostilities between the United States and Iran has reduced fears of immediate supply disruptions through key energy routes. This, combined with a sharp decline in crude oil prices, has eased concerns over energy-driven inflation and pressure on global central banks to maintain restrictive monetary policies.

Markets are now focused on the Federal Reserve's policy meeting, where interest rates are expected to remain unchanged. Investors will closely monitor Fed Chair Kevin Warsh's policy statement and press conference for fresh guidance on the inflation outlook and future path of interest rates.