Gold prices rise as oil drops, easing inflation concerns

Tehran - BORNA - Spot gold rose 0.9 percent to $4,087.79 per ounce, while US gold futures for August delivery rose 0.5 percent to $4,089.90 per ounce.

Tim Waterer, senior market analyst at KCM Trade, said gold is currently benefiting from coordinated movements in oil prices and the dollar.

The dollar index fell 0.3 percent, making gold more affordable for foreign buyers. Oil prices dropped more than four percent on Monday, paring gains made since the US-Israeli aggression against Iran began in late February, which had fueled inflation worries and expectations of higher US interest rates.

While gold is considered an inflation hedge, higher interest rates reduce demand for the non-yielding asset.

Waterer said: "We remain optimistic on gold in the long term. In the short term, its fate is closely tied to the future direction of oil prices, and until a more stable agreement is reached, it will remain volatile and heavily influenced by geopolitical news."

Market focus is also on the Federal Reserve's policy meeting on July 28-29, where investors and economists widely expect interest rates to remain unchanged. Traders are pricing in about a 76 percent chance of a rate hike in September, according to CME's FedWatch tool.

In other precious metals, silver rose 1.7 percent to $59.16 per ounce, platinum rose 1.5 percent to $1,612.04 per ounce, and palladium rose 1.6 percent to $1,263.73 per ounce.

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