Gold Prices Rise Against Cheaper Oil and Weakening Dollar

Gold prices rose on Monday. Spot Gold increased by 1.1% and reached $4,095.37 per ounce, while August futures rose 0.7% and traded at $4,097.40.

The price increase was supported by a sharp decline in oil prices, which last week eliminated a significant portion of the geopolitical premium caused by conflict in the Middle East. In parallel, the yield on U.S. Treasury bonds has decreased, particularly on 10-year bonds, which recorded the largest daily decline over a one-month period.

Gold received additional support from a decline in the U.S. dollar index. A weaker dollar makes the precious metal more accessible to foreign investors, which increases demand.

Market sentiment shifted after the military confrontation between the United States and Iran temporarily halted. On Friday, President Donald Trump decided to suspend military operations following 13 days of airstrikes on Iranian targets. During the same period, Iran has not carried out retaliatory attacks on neighboring countries where U.S. military bases are located.

Investors' attention is now focused on the Federal Reserve's (Fed) monetary policy meeting this week. Despite the market largely expecting interest rates to remain unchanged, CME FedWatch data shows there is still approximately a 33% probability that the Fed will raise rates.

Market participants are paying particular attention to statements by Fed Chair Kevin Warsh to assess how the central bank views inflation risks and the future trajectory of interest rates.

Additionally, investors are awaiting new data on U.S. inflation and the labor market, which will provide further clues for the Fed's subsequent decisions.

Analysts note that interest rate dynamics are one of the key factors for gold, as higher rates typically reduce the investment appeal of non-interest-bearing assets, including gold.