Gold Soars as Oil Prices Plummet Amid Middle East Tensions Ease

Gold prices surged over 1% on Monday after tensions in the Middle East eased, causing oil prices to plummet. The escalation and subsequent de-escalation of hostilities between the US and Iran led to a decline in crude oil prices, which had been fueling concerns about inflation and prolonged high interest rates.

The pause in US-Iran fighting has reduced worries about inflation, allowing gold to regain its appeal as a hedge against price increases. Spot gold rose 1.3% to $4,103.99 per ounce by 0058 GMT, while US gold futures for August delivery gained 0.9% to $4,106.10.

Oil prices dropped 5%, with investors hoping for a diplomatic solution that would de-escalate the conflict. The U.S. Federal Reserve is expected to keep interest rates unchanged this week, despite traders pricing in an 80% chance of a hike in September.