Gold prices moved higher on Monday as investors responded to signs of progress in negotiations between the United States and Iran, while continuing to assess the implications of the Federal Reserve’s recent hawkish stance on interest rates.
Spot gold gained 1.1% to $4,204.34 an ounce by 05:28 ET (09:28 GMT), while U.S. gold futures rose 1.2% to $4,222.42 an ounce.
The advance followed a weak performance last week, when bullion fell 1.4% and posted three consecutive daily declines.
Diplomatic Developments Offer Support
Market sentiment improved after comments from Iranian officials suggested negotiations with Washington were moving forward.
Iranian Foreign Minister Abbas Aragchi said “major progress” had been achieved during talks held in Switzerland. Representatives from Qatar and Pakistan, who are acting as mediators, also reported that negotiators had agreed on a framework for further discussions aimed at reaching a broader settlement.
Technical-level talks are expected to continue in the coming days.
Energy Market Relief Helps Precious Metals
The prospect of diplomatic progress contributed to lower oil prices, which in turn eased concerns over inflation.
Crude prices retreated after earlier gains as investors weighed the possibility of reduced tensions despite ongoing uncertainty surrounding the Strait of Hormuz.
Lower energy costs could reduce the risk of renewed inflationary pressure and lessen the likelihood that the Federal Reserve will need to tighten monetary policy more aggressively.
This environment provided additional support for gold, which is often viewed as a defensive asset during periods of economic uncertainty.
Fed Outlook Continues to Cap Gains
Despite the rebound, expectations for elevated U.S. interest rates continued to limit the upside for bullion.
Investors are still digesting the outcome of last week’s Federal Reserve meeting, where policymakers maintained a cautious approach and signalled that additional rate increases remain possible if inflation proves persistent.
“While geopolitical risks should continue to provide underlying support, a higher-for-longer US rate environment may limit near-term upside,” ING analysts said in a note.
The U.S. Dollar Index remained close to a 13-month high, creating an additional obstacle for gold prices.
Attention now turns to the upcoming release of the U.S. Personal Consumption Expenditures (PCE) inflation report, which could offer further clues on the future direction of monetary policy.
Silver, Platinum and Copper Also Rise
Elsewhere in the metals market, silver climbed 2.2% to $66.36 per ounce.
Platinum outperformed, jumping 11% to $1,683.39 per ounce.
Industrial metals also strengthened, with benchmark copper futures on the London Metal Exchange rising 0.9% to $13,719.70 a tonne. U.S. copper futures gained 0.6% to $6.37 a pound.
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