BY COMFORT OGBONNA
Gold prices moved higher on Monday as declining oil prices and reduced concerns over an immediate escalation in the Middle East provided some relief to financial markets, while investors monitored developments in U.S.-Iran negotiations and upcoming economic data.
Spot gold rose 0.6% to $4,063.35 per ounce as of 0655 GMT, while U.S. gold futures gained 0.1% to $4,053.70. The precious metal benefited from a weaker U.S. dollar, which made gold priced in dollars more affordable for international buyers.
The dollar came under pressure after authorities intervened in currency markets to support the Japanese yen, contributing to renewed demand for gold among investors seeking alternative assets.
“Gold has made a relatively positive start to the week, but gains remain limited given uncertainty surrounding oil markets and developments in the Middle East,” said Tim Waterer, chief market analyst at KCM Trade. He described the move as an optimistic but cautious beginning for bullion.
Oil prices fell sharply after U.S. President Donald Trump said discussions with Iran would take place on Monday and indicated that he was seeking a quick agreement rather than announcing additional military action. Brent crude prices dropped nearly 6%, reducing fears that higher energy costs could fuel inflation.
Gold has faced pressure since tensions between the United States and Iran intensified, as investors weighed the possibility that a conflict-driven increase in oil prices could push inflation higher and encourage central banks to maintain higher interest rates.
Although gold is traditionally considered a hedge against inflation, its appeal can weaken when interest rates rise because the metal does not generate income. Higher borrowing costs often increase demand for interest-bearing assets and reduce the attractiveness of non-yielding investments such as gold.
Investors are also turning their attention to a series of U.S. labor market reports expected this week, including job openings data, the ADP private employment report, weekly unemployment claims and the closely watched nonfarm payrolls report.
Market participants said stronger-than-expected employment data could influence expectations for future Federal Reserve policy decisions. A stronger labor market report could reinforce expectations that interest rates may remain elevated, potentially limiting further gains in gold prices.
“Any renewed escalation in the Middle East that pushes oil prices higher, or a strong nonfarm payrolls report that increases expectations for tighter monetary policy, could limit gold’s upside,” Waterer said.
The Federal Reserve’s latest policy meeting also remained a focus for investors after three officials who opposed the decision to keep rates unchanged expressed concerns that inflation could remain above the central bank’s 2% target without additional rate increases.
Analysts at Standard Chartered said they expect gold prices to find support in the near term before potentially gaining momentum later in the year as seasonal demand increases.
Other precious metals also advanced on Monday. Spot silver gained 0.9% to $58.17 per ounce, platinum rose 0.2% to $1,645.89, and palladium increased 1.1% to $1,287.19.
Investors will continue watching geopolitical developments, energy prices and U.S. economic indicators for signals that could influence the direction of precious metals markets in the weeks ahead.
Original article
Comments