Precious Metals Afternoon: Gold Rises as U.S.-Iran Tensions Ease; Fed Meeting in Focus

Gold rose on Monday (27th), as a temporary halt in hostilities between the U.S. and Iran sent oil prices to a one-week low, easing inflation concerns ahead of the U.S. Federal Reserve's (Fed) upcoming policy meeting this week.

Spot gold climbed 0.5%, reaching $4,074.22 per ounce.

August-delivery gold futures gained approximately 0.2%, closing at $4,077.00 per ounce.

The U.S. Dollar Index (DXY) declined by 0.1%, making dollar-denominated gold relatively cheaper for overseas investors.

Bart Melek, Global Head of Commodities Strategy at TD Securities, said: "Oil markets dropped from over $100 last week to around $90, which helped pull down rate expectations."

Brent crude futures plunged more than 8% to a one-week low after U.S. President Trump announced that the U.S. was having "good" talks with Iran "at this moment." The two nations paused hostilities over the weekend following two weeks of mutual attacks, raising hopes for a diplomatic de-escalation and the resumption of shipping through the Strait of Hormuz.

Falling energy prices not only eased inflation worries but also weakened expectations that interest rates would remain elevated for longer. While gold serves as an inflation hedge, it tends to be suppressed in high-interest-rate environments due to its lack of yield.

Investors are awaiting the Fed's upcoming interest rate decision, with the CME's FedWatch tool indicating a 62% probability of a hold, while the odds of a rate hike in September stand at approximately 82%.

Market participants are also closely watching the U.S. June Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, scheduled for release on Thursday.

Meanwhile, China's net gold imports through Hong Kong more than doubled year-on-year in June, though they declined by over 5% compared to May.

Other precious metals trading:

- Spot silver rose 0.5% to $58.44 per ounce. - Spot platinum gained 2% to $1,620.34 per ounce. - Spot palladium climbed 3.5% to $1,286.25 per ounce.