Gold prices rebounded on Monday, rising 0.9% to $4,197.41 per ounce after hitting a one-week low in the previous session. This recovery coincided with a drop in global oil prices of over 1% following positive geopolitical developments. High oil prices usually trigger inflation worries, which often drive investors toward gold as a safe store of value.
The decline in oil came after high-ranking US and Iranian officials concluded their first round of peace talks in Switzerland. An Iranian Foreign Ministry spokesperson reported good progress, and the mediating nations, Qatar and Pakistan, announced that both sides had agreed to a roadmap toward a final deal within 60 days. Market analysts noted that while the situation remains fluid and highly dependent on shifting geopolitical news, the unexpected diplomatic progress quickly cooled the energy markets.
However, gold’s upward momentum faced strong headwinds from predictions of higher US interest rates. Market sentiment shifted heavily toward tighter monetary policy following recent hawkish signals from Federal Reserve Chair Kevin Warsh, who strongly emphasised the need to control inflation without detailing what might prevent a rate hike.
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According to the latest Federal Reserve projections, 9 of 19 policymakers expect at least one rate increase this year. traders now price in an 89% chance of a December rate hike, up significantly from 61% before the latest Fed meeting. While August gold futures dipped 0.7% to $4,215.90, other precious metals mirrored spot gold’s recovery. Spot silver surged 1.8% to $66.10 per ounce, platinum edged up 0.2% to $1,667.97, and palladium increased by 1% to reach $1,270.41.
