Gold prices moved higher on Monday as investors followed developments in ongoing negotiations between the United States and Iran while continuing to evaluate the outlook for U.S. interest rates after last week’s Federal Reserve meeting.
Spot gold advanced 1.1% to $4,204.34 per ounce by 05:28 ET (09:28 GMT), while U.S. gold futures gained 1.2% to $4,222.42.
The recovery followed a difficult week for bullion, which declined 1.4% and recorded three consecutive losing sessions.
Iran Talks Help Improve Sentiment
The precious metal found support after Iranian officials signalled progress in diplomatic discussions with Washington.
Iranian Foreign Minister Abbas Aragchi said “major progress” had been achieved during the four-party negotiations in Switzerland. Mediators from Qatar and Pakistan also indicated that participants had agreed on a framework designed to move discussions toward a broader agreement.
Technical negotiations are expected to continue throughout the week as both sides work to resolve outstanding issues.
Oil Retreat Eases Inflation Concerns
Gold also benefited from lower oil prices, which helped reduce fears of renewed inflationary pressure.
As signs of diplomatic progress emerged, crude prices eased despite continuing uncertainty surrounding the Strait of Hormuz. Lower energy costs could lessen the risk of inflation accelerating again, reducing expectations that the Federal Reserve may need to adopt a more aggressive policy stance.
This backdrop provided additional support for bullion, which is often viewed as a hedge against economic uncertainty and inflation risks.
Fed Policy Expectations Remain a Headwind
Despite the rebound, gains in gold were restrained by expectations that U.S. interest rates could remain elevated for an extended period.
Investors continue to assess the implications of last week’s Federal Reserve meeting, during which policymakers maintained a hawkish tone and left open the possibility of further rate increases if inflation remains 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 the 13-month high reached last week, further limiting the appeal of non-yielding assets such as gold.
Market participants are now awaiting the release of the U.S. Personal Consumption Expenditures (PCE) price index later this week, which could provide fresh insight into the future direction of monetary policy.
Silver, Platinum and Copper Move Higher
Other precious metals also recorded gains during the session.
Silver rose 2.2% to $66.36 per ounce, while platinum surged 11% to $1,683.39 per ounce.
In industrial metals, benchmark copper futures on the London Metal Exchange climbed 0.9% to $13,719.70 per tonne, while U.S. copper futures advanced 0.6% to $6.37 per pound.