Gold rises more than 1% amid oil price decline

Gold rose more than 1% yesterday after a ceasefire in the Middle East led to lower oil prices, easing concerns about inflation and the prospect of interest rates remaining elevated for longer. Spot gold increased 1.3% to $4,103.99 per ounce, while U.S. August gold futures rose 0.9% to $4,106.10.

Rising oil prices have sparked market worries about inflation and the possibility that interest rates will stay high for an extended period. While gold is viewed as a hedge against inflation, its appeal diminishes when interest rates rise, as it yields no return. A weaker U.S. dollar and lower yields on 10-year Treasury bonds provided further support for gold.

It is widely expected that the Federal Reserve (the U.S. central bank) will keep interest rates unchanged this week, but the CME Group’s FedWatch tool showed that traders still price in an 80% probability of a rate hike in September.

In other precious metals, spot silver rose 2.7% to $59.74 per ounce, platinum gained 2% to $1,619.75, and palladium jumped 2.3% to $1,271.93.