(Bloomberg) — Gold rose, after a pause in fighting between the US and Iran over the weekend eased oil supply risks and inflationary concerns.
Bullion rose as much as 1.1% to near $4,100 an ounce on Monday, having gained nearly 1% in the previous week. The US halted an almost two-week run of strikes against Iran without any explanation or announcement, while the Islamic Republic signaled it was refraining from retaliatory attacks and held talks with Oman to resolve the crucial issue of shipping via the Strait of Hormuz.
Oil tumbled at the week’s open, with global benchmark Brent falling more than 7% to below $90 a barrel in the initial few minutes, before paring losses. That was despite missile attacks claimed by Tehran-backed Houthis in Yemen on facilities linked to Saudi Aramco in the Red Sea port towns of Jizan and Yanbu.
Gold has largely hovered around $4,000 an ounce since late June, with a wave of dip-buying keeping the metal above the psychological threshold that some traders see as a key support. Bullion is down by more than a fifth since the US and Israel launched strikes on Iran in late February, helping to end a multiyear bull run that had carried the metal to a record near $5,600 the month before.
After last month’s interim ceasefire, renewed fighting in the Middle East had stoked inflationary pressures in recent weeks and increased the likelihood that the Federal Reserve may raise interest rates, creating headwinds for non-yielding bullion. Fed watchers are expecting a rate decision this week to be contentious, with the recent rise in energy costs clashing with a tamer-than-expected reading on June consumer prices.
Spot gold climbed 1% to $4,094.03 an ounce at 7:55 a.m. in Singapore. Silver jumped 2.7% to $59.72 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, slipped 0.2%.
–With assistance from Robin Paxton.
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