Gold jumped more than 1% in Asian trading Monday, hitting $4,106.65 an ounce as a weekend pause in US-Iran hostilities pushed oil prices sharply lower and eased fears that prolonged high interest rates would weigh on the economy. The rally in precious metals came as crude fell as much as 7%, reversing forecasts that Brent could revisit its war-era peak near $120 after briefly topping $100 over the weekend.
Why gold is climbing
Spot gold rose 1.33% to $4,106.65, while silver surged 2.7% to $59.74 an ounce, extending a breakout above key resistance. Platinum added 2% to $1,619.75, and palladium gained 2.3% to $1,271.93. The moves follow a weekend pause in hostilities between the US and Iran, after advisers reportedly warned President Trump that the military was nearing the limit of viable targets in Iran and raised concerns about draining munitions stockpiles. A senior Iranian official said Iran will halt its own attacks as long as Washington does the same.
Oil drops on truce hopes
Oil prices tumbled as much as 7% on the diplomatic opening, reversing earlier forecasts that Brent crude could revisit its war-era peak near $120. Lower energy costs typically ease inflation, reducing the odds the Federal Reserve holds interest rates high for longer. Traders are still pricing an 80% chance of a rate hike in September, according to the CME Group's FedWatch Tool.
Fed decision looms
The Fed's rate decision this week will test whether the truce holds long enough to sustain the rally. A split among 104 economists over the central bank's next move shows how uncertain the path remains. Uncertainty deepens if fighting resumes and oil prices reverse. COMEX gold speculators added 4,438 contracts to their net long position in the week to July 21, bringing the total to 123,586 contracts, according to CFTC data.
