Why gold and silver prices are rallying today
What's the story
Gold prices rose on Monday, buoyed by a weaker US dollar and lower Treasury yields. Spot gold was trading at $4,104 per ounce while COMEX gold futures rose to $4,102.10 per ounce, up 0.77% in the latest trade. Silver also witnessed gains with COMEX silver gaining 1.59% to $59.845 per ounce in the latest trade session today.
Market dynamics
Iran-US conflict eases, resulting in sharp fall in oil prices
The recent rally in precious metals comes after a sharp fall in oil prices, amid hopes that the Iran-US conflict may not escalate further.
A senior Iranian official told Reuters that Tehran would stop its attacks if the US refrains from further strikes.
The US has also paused its bombing campaign, easing concerns that inflation could keep rates elevated.
Investment appeal
Investors await Federal Reserve's policy decision
The decline in the US dollar and yields on the benchmark 10-year US Treasury note have made bullion more attractive to investors.
Although gold is seen as an inflation hedge, higher interest rates usually make it less appealing due to no yield generation from the metal.
Now, all eyes are on the US Federal Reserve's policy decision later this week.
Market indicators
Precious metals gain as investors return to the sector
Latest data from the US Commodity Futures Trading Commission (CFTC) shows speculative investors have increased their net long positions in COMEX gold by 4,438 contracts to 123,586 for the week ending July 21.
Silver followed suit with gains along with platinum and palladium as investors returned to the sector after last week's volatility.
Traders will closely monitor key US economic data like durable goods orders and comments from Federal Reserve officials for further interest rate outlook cues.