Gold prices climbed sharply on Monday as easing tensions between the United States and Iran pushed oil prices lower, while investors continued to assess the impact of inflation and future interest rate expectations on the precious metal market.
Spot gold rose 1.2% to $4,562 per ounce, while gold futures gained 0.9% to trade at $4,596.51 per ounce. The rally came after reports suggested that Washington and Tehran had reached a preliminary framework aimed at ending their prolonged conflict, which has disrupted global energy markets for weeks.
According to reports citing an Iranian foreign ministry spokesperson, both countries have made progress on several issues, although a final agreement has not yet been officially confirmed. One key point of discussion involves the Strait of Hormuz, a critical shipping route responsible for transporting nearly 20% of the world’s oil supply.
Recent tensions in the region had significantly reduced tanker traffic through the strait, causing crude oil prices to spike above $100 per barrel and fueling global inflation concerns. However, hopes for a diplomatic breakthrough triggered a sharp decline in oil prices, with Brent crude futures falling 5% to $95.23 per barrel on Monday.
Despite the drop in oil prices, analysts believe inflation risks remain elevated. Investors increasingly expect central banks to keep interest rates higher for longer to combat energy-related inflation pressures. Higher interest rates generally reduce the appeal of non-yielding assets such as gold.
Meanwhile, the U.S. dollar remained relatively strong as traders viewed the American economy as better positioned to withstand energy market disruptions due to its status as a major energy exporter. A stronger dollar can limit gains in gold prices by making the metal more expensive for international buyers.
The dollar index slipped slightly on Monday, offering some support to gold and helping bullion maintain strong upward momentum in global markets.


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