Spot gold surged 1.6% to $4,100 an ounce amid reduced inflation concerns ahead of this week’s Federal Reserve meeting.
Gold prices climbed above $4,100 an ounce on Monday, driven by a temporary ceasefire between the U.S. and Iran that sent oil prices down as much as 9.5%. The drop in energy costs eased inflation fears, boosting demand for non-yielding assets like gold.
Spot gold rose 1.1% to $4,095.16 an ounce by late London morning, while silver gained 1.9% to $59.27. The U.S. dollar index fell 0.2%, making dollar-denominated gold cheaper for international buyers. Iran agreed to halt attacks if the U.S. reciprocated, following weekend talks with Omani officials.
Markets are now focused on the Federal Reserve’s Wednesday announcement, with about two-thirds of traders expecting no change in interest rates. Lower oil prices reduce pressure on the Fed to tighten policy, supporting gold’s rally.