Gold climbs 1% as U.S.-Iran truce pressures oil; all eyes on Fed meeting
GLD•Fed meeting and rate expectations in focus
On Sunday Iran said it will halt its own attacks as long as the United States does the same, a senior Iranian official told Reuters. The development comes as Washington paused its bombing campaign after President Donald Trump's advisers told him they were running out of targets and expressed worries about depleting the U.S. arsenal.
Oil prices tumbled more than 6% on Monday, raising hopes of a diplomatic solution to de-escalate the conflict surrounding the Strait of Hormuz. Elevated energy prices bolster inflation concerns and raise expectations of higher-for-longer interest rates. While gold is seen as a hedge against inflation, the yellow metal suffers in a high-interest rate environment due to its non-yielding characteristic.
Investors are now eyeing the Fed's interest-rate decision meeting on Wednesday, where about 66% of market participants expect rates to be left unchanged.
"Gold is flashing cautiously positive signals: one eye on Iran, the other on the Fed. If Warsh pushes back against the roughly two hikes now embedded in the curve, that could be quite supportive for gold," Norman said.
Traders are pricing in about a 77% chance of a rate-hike in September, according to the CME FedWatch Tool.
Elsewhere, spot silver XAG= rose 1.7% to $59.15 per ounce, platinum XPT= gained 2.7% to $1,631.20, and palladium XPD= climbed 3.3% to $1,284.00.
Gold gains as oil prices fall on U.S.-Iran pause
July 27 (Reuters) - Gold prices climbed on Monday as a pause in strikes between U.S. and Iranian forces dragged crude oil prices lower, helping ease inflation concerns and worries about the risk of higher interest rates in a week where policymakers at the Fed are due to meet.
Spot gold XAU= gained 0.9% to $4,089.03 per ounce by 0805 GMT, while U.S. gold futures GCcv1 for August delivery rose 0.5% to $4,090.80.
"Precious metals have started the week on the front foot, helped by a pause in Middle East hostilities. Oil has slumped and both the dollar and U.S. Treasury yields have eased," said independent analyst Ross Norman.
