Gold gains on pause in US-Iran fighting; Fed decision looms

"Longer term, I remain constructively bullish on gold. Gold's immediate fate is closely tied to where oil prices head from here and the path higher is likely to remain volatile and heavily influenced by geopolitical headlines until a more durable peace takes hold," Waterer said.

Focus is also on the Fed meeting on July 28-29, where market participants widely expect rates to be left unchanged. Traders are pricing in a 76% chance of a hike in September, according to the CME FedWatch Tool

Among other metals, spot silver XAG= rose 1.7% to $59.16 per ounce, platinum XPT= climbed 1.5% to $1,612.04 and palladium XPD= gained 1.6% to $1,263.73.

July 27 (Reuters) - Gold rose on Monday as a pause in Middle East hostilities sent oil prices sharply lower and eased some inflation concerns, while investors waited for the U.S. Federal Reserve's policy decision due later this week.

Spot gold XAU= rose 0.9% to $4,087.79 per ounce by 0421 GMT. U.S. gold futures GCcv1 gained 0.5% to $4,089.90.

"Gold is a clear beneficiary today of the dual price action in oil and the U.S. dollar," said Tim Waterer, chief market analyst at KCM Trade.

The U.S. dollar index .DXY fell 0.3%, making greenback-priced metals more affordable for other currency holders. USD/

Iran will halt its own attacks as long as the United States does the same, a senior Iranian official told Reuters on Sunday. The United States pressed pause on 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 were down more than 4% on the day. O/R