Gold surged 1.1% to approximately $4,095 an ounce early Monday after oil prices took a sharp dive following a pause in U.S.-Iran military actions over the weekend. President Trump halted U.S. bombing on Iranian sites Friday, ending 13 consecutive nights of strikes, which eased geopolitical tensions and pushed crude prices down over 5%, reversing much of last week's gains.
This decline in oil prices reduced immediate inflation worries, prompting investors to seek safety in gold and other precious metals. The U.S. dollar weakened by 0.3%, making gold more attractive to holders of other currencies. Meanwhile, U.S. Treasury yields also fell, with the 10-year note set for its largest one-day drop in a month, adding further support to the non-yielding metal.
Market focus is now on the Federal Reserve's policy meeting scheduled for Wednesday. While the Fed is expected to maintain current interest rates, there remains about a 33% chance of a hike based on CME FedWatch data. Traders will scrutinize Fed Chair Kevin Warsh's remarks for hints on future rate cuts and the central bank's inflation outlook. Lower interest rates historically boost gold's appeal, as the metal does not pay dividends or interest.
Silver and platinum also climbed, up 2.1% to $59.39 and 2.3% to $1,630.83 per ounce respectively, reflecting a broader shift toward precious metals amid easing Middle East tensions and falling energy costs.
