Gold climbed more than one percent in Asian trading Monday. A weekend pause in US-Iran hostilities pushed oil prices lower and eased fears of prolonged high interest rates.

Spot gold traded at ,106.65 per ounce Monday, up 1.33% on the day, according to TradingView data. The move underscored gold’s dual role as both a safe-haven asset and an instrument sensitive to interest-rate expectations, two forces that were pulling in the same direction this session.

Oil Retreat Lifts Precious Metals

The pause came as advisers reportedly warned Trump that the military was nearing the limit of viable targets in Iran. They also flagged concerns about draining U.S. munitions stockpiles, prompting the pause in strikes. Iran will halt its own attacks as long as Washington does the same, a senior Iranian official told Reuters.

Oil prices tumbled as much as 7% on hopes for a diplomatic resolution. That reverses recent forecasts that Brent crude could revisit its war-era peak near 0 after going above 0 at the weekend. Lower energy costs typically ease inflation, because fuel feeds directly into transport, manufacturing and consumer prices. Softer inflation, in turn, reduces the odds that the Fed holds rates high for longer. Gold’s appeal fades when rates stay elevated, since the metal pays no yield and must compete with interest-bearing assets such as bonds.

Traders are still pricing an 80% chance of a rate hike in September, according to the CME Group’s FedWatch Tool, which tracks futures-implied rate expectations. That leaves the market braced for a tighter policy stance even as the geopolitical risk premium unwinds.

Gold also Boosts Silver

Other precious metals rallied in tandem. Spot silver climbed 2.7% to .74 an ounce, building on a recent breakout above key resistance. Platinum gained 2% to ,619.75, and palladium rose 2.3% to ,271.93. The broad advance suggests investors were rotating into hard assets as a hedge, rather than chasing a single metal.

COMEX gold speculators added 4,438 contracts to their net long position in the week to July 21. That brought the total to 123,586 contracts, according to CFTC data, a sign that professional money remained positioned for further upside even before the weekend de-escalation.

The Fed’s rate decision this week will test whether the truce holds long enough to sustain the rally. A split among 104 economists over the central bank’s next move shows how uncertain the path remains. That uncertainty deepens if fighting resumes and oil prices reverse, which would revive the inflation worries the pause has only temporarily calmed.

Source: BeInCrypto