Spot gold gained 1.3% in early trading before paring some of its gains, trading at $4,093.10 per ounce.

U.S. gold futures for August delivery rose 0.9% to $4,106.10 per ounce before also reducing their gains.

A senior Iranian official told Reuters on Sunday that Iran would halt its attacks as long as the United States did the same.

Oil prices fell 6% as investors bet on a diplomatic solution that could reduce tensions in the conflict.

Brent crude was trading around $90 per barrel at the time of reporting.

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Interest Rates

Rising oil prices have raised market concerns over inflation and the possibility that interest rates could remain high for longer.

While gold is considered a hedge against inflation, its appeal tends to decline when interest rates rise because it does not generate returns.

The decline in the U.S. dollar and 10-year Treasury yields provided further support for gold prices.

The Federal Reserve is widely expected to keep interest rates unchanged this week.

However, the CME Group’s FedWatch tool showed that traders still expect an 80% probability of an interest rate hike in September.

Other Precious Metals:

  • Spot silver rose 2.7% to $59.74 per ounce.
  • Platinum increased 2% to $1,619.75 per ounce.
  • Palladium jumped 2.3% to $1,271.93 per ounce.