Gold prices recovered on Monday after a three-session decline as signs of progress in US-Iran negotiations eased pressure on oil markets and encouraged investors to move back into the precious metal.
Spot gold rose 1.2 percent to US$4,209.49 an ounce by 1205 GMT, after falling to its lowest level since June 11 on Friday. US gold futures for August delivery, however, slipped 0.4 percent to US$4,228.30 an ounce.
Analysts said the decline in crude oil prices following reports of progress in diplomatic talks helped redirect investor interest toward gold.
“Gold may be benefiting from flows of hot money moving out of oil and back into gold,” said independent analyst Ross Norman.
Senior US and Iranian officials concluded their first round of talks in Switzerland on Monday, with Iranian state media reporting positive developments and progress in discussions.
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The negotiations follow a memorandum of understanding reached last week to extend a fragile ceasefire agreed in April by at least 60 days.
Oil prices fell after the reports, with Brent crude futures declining nearly 2 percent.
The drop in oil prices reduced concerns that a prolonged Middle East conflict could fuel inflation, a factor that had previously supported expectations of higher interest rates and weighed on gold.
Gold typically benefits from lower interest rates because it does not generate income, but higher rates tend to make the asset less attractive compared with interest-bearing investments.
Despite Monday’s rebound, analysts cautioned that the recovery may not signal a lasting reversal.
“It is still too early to call a turnaround in gold, particularly with the Fed maintaining a hawkish outlook,” Norman said.
US Federal Reserve Chair Kevin Warsh maintained a firm stance on inflation last week, giving little indication that policymakers would delay potential rate increases.
Markets are currently pricing in an 89 percent probability of a US rate increase in December, according to the CME FedWatch Tool.
Investment bank Morgan Stanley said gold could still have upside potential, but reaching $5,200 an ounce in the second half of 2026 would likely depend on renewed exchange-traded fund demand and evidence that lower oil prices are influencing interest-rate expectations.
Other precious metals also gained. Spot silver climbed 2.5 percent to US$66.51 an ounce, platinum increased 1.5% to $1,689.02, and palladium rose 0.9percent to US$1,269.08.
Meanwhile, the British pound remained stable after UK Prime Minister Keir Starmer announced plans to resign, adding a separate political factor for currency markets to monitor.
