Gold prices moved higher on Monday as investors monitored progress in US-Iran negotiations in Switzerland. Markets also continued to assess the outlook for US monetary policy following the Federal Reserve’s hawkish signals last week.
Spot gold rose 1.1% to $4,205.05 per ounce by 06:48 GMT. Meanwhile, US gold futures advanced 1.2% to $4,223.42.
The precious metal had fallen 1.4% during the previous week and entered Monday’s session after three consecutive days of losses.
US-Iran Talks Support Gold Prices
Gold found support after Iranian officials reported progress in negotiations with the United States.
The diplomatic developments eased concerns about a prolonged disruption to global energy supplies. They also placed downward pressure on crude oil prices.
Iranian Foreign Minister Abbas Araqchi said the quadrilateral talks in Switzerland had produced major progress. Mediators from Qatar and Pakistan also confirmed that negotiators had agreed on a roadmap toward a broader settlement.
Technical discussions between the parties are expected to continue throughout the week.
Lower Oil Prices Ease Inflation Concerns
Falling oil prices helped reduce concerns about energy-driven inflation.
Lower energy costs could limit the need for the Federal Reserve to adopt an even more aggressive monetary policy stance. This supported gold, which often benefits when expectations for further interest rate increases decline.
Brent crude gave back earlier gains on Monday after signs of diplomatic progress emerged. However, tensions surrounding the Strait of Hormuz continued to create uncertainty in global energy markets.
Hawkish Federal Reserve Limits Gold Rally
Despite Monday’s advance, expectations for higher US interest rates limited the upside in gold prices.
Investors are still evaluating the Federal Reserve’s latest policy meeting. Officials maintained a hawkish stance and left the possibility of additional rate increases on the table due to persistent inflation risks.
Higher interest rates can weaken demand for gold because the precious metal does not generate interest or dividend income.
ING analysts said geopolitical risks should continue to provide underlying support for bullion. However, they warned that a prolonged period of elevated US interest rates could restrict further gains in the near term.
Strong US Dollar Adds Pressure
The US Dollar Index remained close to the 13-month high reached during the previous week.
A stronger dollar can place pressure on gold because it makes the metal more expensive for buyers using other currencies.
Investors are now awaiting the latest US Personal Consumption Expenditures price index later this week. The PCE index is the Federal Reserve’s preferred inflation measure and could provide further clues about the future direction of monetary policy.
Silver and Platinum Prices Advance
Other precious metals also recorded gains on Monday.
Silver prices climbed 2.8% to $66.70 per ounce, while platinum rose 1.6% to $1,694.60 per ounce.
Benchmark copper futures on the London Metal Exchange gained 0.8% to $13,700.33 per metric ton. Meanwhile, US copper futures remained broadly unchanged at $6.35 per pound.
