- Spot gold and gold futures rose in the Asian session, mainly benefiting from a 0.3% decline in the US dollar index, which boosted the pricing currency. Gold achieved a cumulative gain of nearly 1% last week.
- The US and Iran paused military strikes against each other and surrounding areas over the weekend, leading to a significant over 5% pullback in oil prices. The marginal easing of Middle East tensions temporarily reduced concerns about supply disruptions in key energy channels such as the Strait of Hormuz and the Red Sea.
- The market focus has fully shifted to this week's Federal Reserve (Fed) interest rate decision. Although maintaining the benchmark rate is a general consensus, traders are closely watching Fed Chairman Kevin Walsh's latest guidance on the inflation path and timing of rate cuts.
Weaker Exchange Rate Boosts Precious Metal Prices
The US dollar index saw a marginal decline of 0.3%, making gold priced in dollars more attractive to holders of non-US currencies. Spot gold prices rose 1% to $4,094.50 per ounce, while US gold futures for August delivery increased 0.6% to $4,096.60 per ounce. Exchange rate factors were the main support for today's gold market, driving both spot and futures prices upward.
Easing Geopolitical Tensions Trigger Oil Plunge
US President Trump ordered a halt to airstrikes on Iranian targets, and Iran also restrained its retaliatory actions, causing geopolitical risk premiums to quickly dissipate. International oil prices plummeted over 5% in early Monday trading, completely erasing last week's gains driven by concerns over disruptions in the Strait of Hormuz and the Red Sea. Although the oil plunge helps alleviate global inflationary pressures, it also prompts a reassessment of commodity volatility in the market.
Market Closely Watches Fed's Monetary Policy Signals
The Federal Reserve is set to hold a monetary policy meeting this week, with market participants widely expecting policymakers to maintain the current interest rate policy. Traders will closely scrutinize Fed Chairman Kevin Walsh's statements at the press conference to assess policymakers' latest views on recent market turmoil and inflation risks, and to identify specific macroeconomic conditions that might trigger future rate cuts.
Precious Metals Sector Shows Overall Gains
Driven by the rise in gold, other major precious metals also recorded significant gains. Spot silver prices rose 2% to $59.37 per ounce, while spot platinum increased 1.6% to $1,618.83 per ounce. This trend indicates that funds are aligning with the weakening US dollar trend, engaging in long positions within the overall precious metals sector, further elevating the short-term valuation center of the sector.
