Gold prices moved higher on Monday as a weaker U.S. dollar increased demand for the precious metal.
Investors were also assessing the pause in military action between the United States and Iran while preparing for the Federal Reserve’s policy announcement later this week.
Spot gold climbed 1.1% to $4,096.36 per ounce by 02:52 ET, or 06:52 GMT. Meanwhile, U.S. gold futures for August delivery gained 0.68% to $4,098.60.
Gold also advanced by nearly 1% during the previous week, despite volatile trading conditions.
Weaker US Dollar Lifts Gold Prices
The U.S. Dollar Index declined by around 0.3% during Monday’s session.
Because gold is priced in dollars, a weaker greenback makes the metal more affordable for investors using other currencies. This often increases international demand for bullion.
The softer dollar therefore provided additional support for gold prices at the beginning of the week.
US-Iran Pause Sends Oil Prices Lower
Gold’s gains came as crude oil prices fell sharply following a weekend pause in military strikes between the United States and Iran.
After 13 consecutive nights of attacks on Iranian targets, U.S. President Donald Trump suspended the bombing campaign late on Friday. The decision was intended to create an opportunity for diplomatic negotiations.
Iran also avoided launching retaliatory attacks against neighboring countries that host U.S. military bases.
The pause reduced immediate fears of a broader conflict across the Middle East.
Oil Slump Eases Inflation Concerns
Oil prices declined by more than 5% in early Monday trading.
The drop reversed part of the previous week’s rally, which had been driven by concerns over possible supply disruptions through the Strait of Hormuz and the Red Sea.
Lower energy prices could help reduce inflationary pressure by lowering transportation, manufacturing and consumer costs.
However, investors are waiting for the Federal Reserve’s latest assessment of inflation and economic growth following recent market volatility.
Federal Reserve Decision Takes Center Stage
The Federal Reserve is scheduled to announce its latest monetary policy decision on Wednesday.
The central bank is widely expected to keep interest rates unchanged. Nevertheless, traders will closely examine Fed Chair Kevin Warsh’s comments for clues about the timing of possible rate cuts.
Markets will also look for signs of how policymakers view inflation risks, economic activity and recent geopolitical developments.
Lower interest rates generally support gold because they reduce the opportunity cost of holding an asset that does not generate interest.
US Economic Data Could Shape the Fed Outlook
Investors will also monitor upcoming U.S. economic reports, including inflation and labor market data.
These indicators could provide further guidance on whether the Federal Reserve is likely to cut, raise or maintain interest rates during the remainder of the year.
Weaker inflation or employment figures could strengthen expectations for future rate cuts. Stronger-than-expected data may encourage policymakers to maintain a more cautious position.
Silver and Platinum Record Strong Gains
Other precious metals also moved higher on Monday.
Silver prices rose 2.1% to $59.39 per ounce, while platinum gained 2.3% to $1,630.83 per ounce.
Copper prices delivered more limited moves. Benchmark copper futures on the London Metal Exchange increased by 0.4% to $13,693.58 per ton.
U.S. copper futures remained broadly unchanged at $6.36 per pound.
Gold’s near-term direction is likely to depend on movements in the U.S. dollar, the Federal Reserve’s policy message and further developments in the Middle East.
