Gold rose over 1% on Tuesday as investors evaluated reports of renewed Middle East mediation efforts, which could ease energy prices and relieve concerns over prolonged high interest rates meant to curb inflation.
Spot gold increased 1.5% to $4,064.89 per ounce by 0911 GMT, while August U.S. gold futures climbed 1.4% to $4,069.70.
Independent analyst Ross Norman noted that gold has been searching for a price floor following its dramatic rally to record highs in January, suggesting the recent sell-off may have bottomed out. However, he cautioned that the metal continues to struggle to build upward momentum.
Oil prices edged higher on Tuesday, recovering from an earlier 1% drop as markets balanced potential U.S.-Iran mediation against continued military strikes and Houthi threats of a naval blockade on Saudi Arabia. A senior Iranian official confirmed that Tehran received a proposal for a 10-day ceasefire to save the interim deal, while the Houthi movement threatened a Saudi maritime embargo that could disrupt global energy supplies further.
A drop in oil prices generally cools inflation, reducing the pressure on central banks to keep interest rates elevated. Although gold serves as a traditional inflation hedge, higher rates increase the opportunity cost of holding non-yielding bullion. Traders are currently pricing in roughly a 63% probability of a rate hike in September, per the CME FedWatch Tool.
In other precious metals, spot silver surged 4.8% to $59.11 per ounce, platinum gained 1.9% to $1,624.88, and palladium rose 2.3% to $1,281.75.
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