Gold Prices Rise on Pause in US-Iran Hostilities, Fed Decision Looms

Gold prices rose more than 1 percent on Monday after a pause in US-Iran hostilities sent oil prices lower, easing some inflation concerns. The Federal Reserve's policy decision is also looming, with investors awaiting its outcome.

Spot gold increased to $4,110.56 per ounce, while U.S. gold futures gained 1 percent to $4,112.10. Tim Waterer, chief market analyst at KCM Trade, attributed the rise in gold prices to the dual price action in oil and the US dollar, both of which have dropped on de-escalation hopes between the US and Iran.

The US dollar index was down 0.3 percent, making greenback-priced metals more affordable for other currency holders. Oil prices were down over 4 percent for the day since the conflict began earlier this year, driving inflation concerns and expectations of central bank rate hikes. This has weighed on gold, which becomes less attractive as higher rates raise the opportunity cost of holding non-yielding metal.

Waterer remains constructively bullish on gold in the longer term but warns that its immediate fate is closely tied to oil prices and geopolitical headlines until a more durable peace takes hold.