Gold prices rose during Monday’s trading, benefiting from falling oil prices and a drop in the U.S. dollar, after U.S. President Donald Trump favored giving the diplomatic track with Iran a new opportunity. This eased concerns about inflation rising and about the continuation of tightening U.S. monetary policy.
And the price of gold rose in spot transactions by 0.7% to reach $4,068.54 per ounce, supported by a decline in the U.S. currency, which boosted the precious metal’s appeal among investors outside the United States.
Falling oil and the dollar boost gold gains
Gold rose at the same time as oil prices fell by more than 5% after US President Donald Trump announced that he would hold talks with Iran on Monday, without specifying a time limit for reaching an agreement, which calmed concerns about the widening of conflict in the Middle East and its impact on energy prices and global inflation.
The US dollar also faced additional pressure after Japanese authorities intervened to support the yen, making dollar-denominated gold less expensive for investors holding other currencies, giving the yellow metal double support from falling oil and the US currency.
Tim Waterer, chief market analyst at KCM Trade, explained that gold started the week with positive performance, but the pace of gains remains limited amid ongoing uncertainty about geopolitical developments and moves in energy markets.
Inflation and interest rates are still the most important factors
Although gold is among the most prominent safe havens during crises, the war between the United States and Iran has imposed mixed pressures on the precious metal over the past weeks.
On one hand, geopolitical risks boosted demand for gold, but on the other hand, higher oil prices increased concerns about a faster pace of inflation, which could lead the Federal Reserve to keep interest rates high for longer or even raise them again.
Rising interest rates weigh negatively on gold because it is an asset that does not generate periodic returns, reducing its appeal compared with bonds and yield-bearing assets.
Markets await US jobs data
This week, investors’ focus will shift to a series of important US economic data, which may redraw expectations for monetary policy over the coming months.
The upcoming data include the job openings report, employment data released by ADP, and weekly jobless claims, in addition to the non-farm payrolls report, which is the most important indicator for measuring the strength of the US labor market.
Investors believe that any strong data could increase the likelihood of a rate hike at the September meeting, which may limit the continuation of gold’s gains, while weak data could give the precious metal additional momentum.
Federal officials stick to a hawkish stance
At the same time, three Federal Reserve officials—who previously voted in favor of raising interest rates—renewed their warnings that keeping current monetary policy could allow inflation to remain above the 2% target level.
These statements reflect the continuation of the split within the US Federal Reserve over the appropriate path for monetary policy, which increases market anticipation ahead of the next economic data releases.
On the other hand, Standard Chartered analysts believe that gold may maintain its support in the near term, with expectations that momentum will gradually return, driven by increased seasonal demand for the precious metal. Other precious metals also record gains.
The gains were not limited to gold; other precious metals also saw notable increases as investors’ appetite for safe-haven assets improved.
In spot trading, silver rose 1.4% to $58.46 per ounce. Platinum climbed 0.5% to $1,650.63 per ounce, while palladium jumped 1.6% to $1,293.50 per ounce.
This performance reflects an improvement in investors’ sentiment after easing pressures resulting from higher oil prices, alongside continued caution regarding any new developments in the Middle East. Technical analysis of gold – XAU/USD
Gold is currently trading near $4,068 per ounce after successfully benefiting from the drop in the dollar and oil prices, but the next direction will still be tied to US economic data and interest rate expectations.
The $4,050 level is a key technical support; maintaining trading above it could open the way to targeting the first resistance at $4,100, then $4,150 if buying momentum continues.
If gold, however, falls again and breaks the $4,050 level, the correction could extend toward $4,000, followed by stronger support near $3,950.
Over the coming days, gold’s moves will remain tied to the results of US labor market data, statements from Federal Reserve officials, and developments in US-Iranian negotiations, which will have a direct impact on oil and the dollar and the direction of the precious metal.
By: Luai Al-Ahah Yahya
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