Spot gold was trading around $4,104 an ounce, while COMEX gold futures rose to $4,102.10 an ounce, up 0.77% in the latest trade. Silver also advanced, with COMEX silver gaining 1.59% to $59.845 an ounce.
The precious metals rally comes after oil prices fell sharply on hopes that the conflict involving Iran and the United States may not escalate further. A senior Iranian official told Reuters that Tehran would halt its attacks as long as the US refrains from further strikes, while the US also paused its bombing campaign.
Lower crude oil prices have eased concerns that the conflict could fuel inflation and keep interest rates elevated for longer. Although gold is widely regarded as a hedge against inflation, higher interest rates tend to reduce its appeal because the metal does not generate any yield.
Another factor supporting gold was the decline in the US dollar and yields on the benchmark 10-year US Treasury note, making bullion more attractive to investors.
Markets are now awaiting the US Federal Reserve’s policy decision later this week. The central bank is widely expected to leave interest rates unchanged, although traders continue to price in the possibility of another rate hike later this year.
Investor positioning has also remained supportive. Latest data from the US Commodity Futures Trading Commission (CFTC) showed that speculative investors increased their net long positions in COMEX gold by 4,438 contracts to 123,586 in the week ended July 21.
Silver also tracked the broader strength in precious metals. Alongside gold, platinum and palladium posted gains as investors returned to the sector after last week’s volatility.
Going ahead, traders will closely watch key US economic data, including durable goods orders, as well as comments from Federal Reserve officials for further cues on the interest rate outlook, which remains a key driver for gold and silver prices.
-With Reuters inputs
