Gold rises as US-Iran peace optimism pulls oil prices lower

Gold firmed on Monday, recovering from an over one-week ‌low hit in the previous session, as progress in U.S.–Iran peace talks weighed on oil prices and tempered some inflation concerns.

Spot gold rose 0.4% to $4,174.90 per ounce by 12:12 p.m. ET (1612 GMT). ​Prices touched their lowest since June 11 on Friday.

U.S. gold futures for ​August delivery fell 1.2% to $4,193.90 per ounce.

“Energy prices will remain a ⁠key short-term driver for the precious metal space,” Saxo Bank analyst Ole Hansen said.

“We’re ​seeing the ongoing bumpy talks in Switzerland between the U.S. and Iran still pointing ​towards a deal that basically would add fresh barrels of crude into the market,” putting pressure on crude prices and helping gold, Hansen added.

U.S. Vice President JD Vance said talks with Iranian officials in ​Switzerland had laid a “good foundation” for a final peace deal, despite tensions over ​the Strait of Hormuz and Lebanon.

Brent crude futures fell more than 3% after the announcement.

On the U.S. ‌policy ⁠front, traders now see a 90% chance of a rate hike in December, up from 61% before the Federal Reserve’s meeting last week, according to the CME FedWatch Tool.

Nine of the Fed’s 19 policymakers believe they will need to raise the policy ​rate this year.

Despite its ​reputation as a ⁠hedge against inflation, gold tends to lose appeal when interest rates rise, as the non-yielding asset becomes less attractive relative to ​interest-bearing investments.

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Bank of America said in a note on Friday that ​its $6,000-per-ounce gold ⁠price target appears unlikely, as the market would need to fully price out rate hikes for such levels to be reached.
However, the original premise underpinning the bank’s bullish gold ⁠call — ​unorthodox U.S. macro policy — remains intact, it added.

Among other ​metals, spot silver rose 0.5% to $65.24 per ounce, platinum gained 0.1% to $1,666.45 and palladium was down 0.5% ​at $1,251.92.