Gold Jumps Above $4,100 as US-Iran Truce Eases Inflation Fears, Dollar Slips; All Eyes on Fed
Gold rallied above $4,100 as a weekend pause in US-Iran hostilities sent oil prices tumbling and the dollar lower. The focus now shifts to the Fed’s rate decision and Chair Warsh’s tone on Wednesday.
Gold rallied more than 1% in early Asian trade Monday, as a weekend pause in US-Iran military strikes sent oil prices tumbling and eased inflation fears, while a softer dollar burnished the appeal of the dollar-priced metal. All eyes are now on the Fed’s policy meeting this week.
- Spot gold was trading at $4,110.56/oz as of 6:00 AM ET (18:00 Beijing time), up 1.4% on the day[CNBC].
- US gold futures rose 1% to $4,112.10/oz[CNBC].
- The dollar index slipped 0.3%, making gold cheaper for holders of other currencies[Investing.com].
- Oil prices cratered more than 5% in early trade, with Brent crude sliding to around $92/bbl, as the truce eased fears of supply disruptions through the Strait of Hormuz and the Red Sea[CNBC].
- Gold still managed a near-1% gain last week amid choppy trading[Investing.com].
- The Fed is widely expected to hold rates steady this week, but markets will hang on Chair Kevin Warsh’s every word for clues on the timing of future cuts and the central bank’s inflation assessment[Investing.com].
Gold prices jumped in Asian trading Monday (July 27). Spot gold (XAU/USD) was at $4,110.56/oz as of 6:00 AM ET (18:00 Beijing time), up 1.4% from the prior session, while US gold futures climbed about 1% to $4,112.10/oz[CNBC]. The rally was fueled by a double tailwind: a weekend pause in US-Iran hostilities that sent crude prices tumbling, easing some inflation pressure, and a softer dollar that lowered the cost of bullion for overseas buyers. Gold had already eked out a near-1% gain last week in volatile trade[Investing.com].
US-Iran Truce Sends Oil Plunging 5%
The de-escalation in geopolitical tensions was the core driver of Monday’s risk-on mood. According to CNBC, President Donald Trump late Friday called off 13 consecutive nights of bombing against Iranian targets to allow diplomacy to proceed; Iran also refrained from retaliatory strikes over the weekend against neighboring countries hosting US bases[Investing.com]. The news sent international crude futures crashing more than 5% in early Monday trade. Benchmark Brent crude slid to around $92/bbl, while US West Texas Intermediate (WTI) futures also took a steep hit[CNBC]. That marked a sharp reversal from the prior week, when oil had surged on fears of supply disruptions through the Strait of Hormuz and the Red Sea. The plunge in oil directly eased worries about persistent inflation, a positive for gold, which is often bought as an inflation hedge. At the same time, the dollar index (DXY) slipped 0.3%, further burnishing the appeal of dollar-priced gold[Investing.com].
Fed Decision Takes Center Stage
With geopolitical risks temporarily on the back burner, investor attention has snapped to the Fed’s rate decision due Wednesday (July 29). The central bank is widely expected to hold rates steady, but traders will parse every word from Chair Kevin Warsh’s press conference for clues on the timing of future cuts and how policymakers are assessing inflation risks[Investing.com]. A slew of US economic data is also due this week, including the PCE price index, which will provide further guidance on the Fed’s policy path[Investing.com].
Notably, while no rate hike is expected this week, some analysts believe policymakers could lay the groundwork for one before year-end. Lukman Otunuga, senior market analyst at FXTM, noted that markets are pricing in a 34% probability of a July hike but are leaning more toward a September move. He added that new US tariffs of 10% to 12.5% on imports from major trading partners inject uncertainty and could trigger second-round inflation effects, making it harder for the Fed to ease policy[KITCO].
Gold Holds $4,000; Analysts Eye Structural Support
Despite macro headwinds like rising rate expectations, gold has held above the key $4,000/oz psychological level for the past five weeks. Kitco cited analysts saying this resilience could signal a potential inflection point for the market[KITCO]. Analysts noted that even as oil prices hit nine-week highs on the Iran war escalation—stoking inflation fears and forcing central banks to sound more hawkish—gold faced only limited selling pressure and held its key support.
Simon-Peter Massabni, head of business development at XS.com, argued that if oil stays elevated, it could both push up inflation and weigh on economic activity and the labor market. In that scenario, fears of a growth slowdown could eventually trump inflation fears. Investors might then rotate back into defensive assets, benefiting gold—especially if markets begin pricing in a future Fed easing cycle[KITCO]. FXTM’s Otunuga emphasized that $4,000 remains a structural floor. A decisive break below that could open the door to $3,950 and even $3,900, but if it holds, gold could bounce toward $4,100 and $4,200[KITCO].
Precious and Industrial Metals Rally in Tandem
Gold’s strength lifted other precious metals as well. According to Investing.com, silver (XAG/USD) rose 2.1% to $59.39/oz, and platinum (XPT/USD) gained 2.3% to $1,630.83/oz[Investing.com]. Among industrial metals, LME benchmark copper futures edged up 0.4% to $13,693.58/ton, while US copper futures were roughly flat at $6.36/lb[Investing.com].
Sources
- CNBC — Gold gains on pause in US-Iran fighting; Fed decision looms
- Reuters — Gold rises over 1%, oil tumbles on pause in US-Iran fighting
- Investing.com — Gold rises on weaker dollar; traders weigh Middle East pause, Fed outlook
- CNBC — Stock futures climb, oil prices fall as U.S. and Iran pause attacks: Live updates
- KITCO — Gold continues to hold $4,000, which could signal an inflection point, analysts say
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