Gold prices strengthened during Monday’s trading (August 3) after US President Donald Trump announced that new negotiations with Iran would begin. Hopes for a deal are seen as a way to ease conflict while simultaneously lowering inflationary pressure stemming from energy prices.
Gold traded around US$4,070 per troy ounce after recording a gain of approximately 1% throughout July. This performance marked the first monthly rise since February, although prices remain well below levels seen before the US-Iran conflict began.
Sentiment improved after Trump called off plans for a major strike against Iran. That decision followed requests from several Middle Eastern nations, including Saudi Arabia, for Washington to prioritize diplomacy. Brent crude prices subsequently fell by more than 7%.
The drop in oil prices helped alleviate concerns about a resurgence in inflation. This eased pressure on the Federal Reserve to raise interest rates aggressively, making gold—which yields no interest—an attractive option once again.
The market is also monitoring the Fed’s policy direction following reports that Kevin Warsh is considering reducing the frequency of policy meetings. Such a move could potentially limit market guidance, particularly after three Fed officials had previously supported raising interest rates.
Spot gold rose approximately 0.6% to US$4,070.21 per troy ounce, while the US dollar weakened. As long as US-Iran negotiations keep oil prices low and expectations for interest rate hikes remain subdued, gold has the potential to continue its upward trend in the short term. (asd)
Source: Newsmaker.id