(Bloomberg) — Gold advanced after US President Donald Trump said fresh negotiations with Iran would begin later Monday, raising hopes for a breakthrough in the months-long conflict that would ease energy-driven inflation.
Bullion was trading around $4,070 an ounce, having seen out July with a 1% gain — its first monthly increase since February. Trump said on Sunday that he had called off a massive attack on Iran after allies in the Middle East, including Saudi Arabia, asked him to pursue a deal instead. Benchmark Brent crude fell more than 7%.
Bullion traders are also closely monitoring the Federal Reserve’s next steps after the New York Times reported Chairman Kevin Warsh as saying he was considering reducing the frequency of policy meetings. Any reduction would mark a significant shift for the US central bank, which currently meets eight times a year and last Wednesday voted 9-3 to hold interest rates steady.
Investors have criticized Warsh’s attempts to limit guidance to markets on the direction of rates, and the Fed is under mounting pressure to do more to curb inflation. The three officials who dissented last week warned that waiting too long to act could risk the need for even more aggressive policy moves later.
Gold is down by more than a fifth since the US-Iran war began more than five months ago, with high energy prices stoking inflationary pressures and raising the likelihood that interest rates will stay higher for longer — a headwind for precious metals, which don’t pay interest.
Spot gold was 0.6% higher at $4,070.21 an ounce as of 7:39 a.m. in Singapore. Silver rose 1.2% to $58.26 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.2% lower.
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