Gold prices advanced sharply on Monday, climbing as much as 1.1% to trade near $4,100 an ounce.
The rally was driven by a weekend pause in fighting between the US and Iran, which significantly eased concerns over potential oil supply disruptions and subsequent inflationary pressures.
The move marks a shift from recent trading dynamics, where gold had been supported by dip-buying even as geopolitical tensions in the Middle East pushed crude oil benchmarks to multiweek highs.
The temporary de-escalation has reduced the immediate risk premium embedded in energy markets, allowing precious metals to reprice based on softer inflation expectations rather than pure safe-haven demand.
Over the past few days, gold had managed to hold onto gains despite the volatile backdrop, with Friday’s session seeing the metal recover earlier losses as crude oil retreated from its peaks.
The current cross-asset shift reflects a broader market reassessment of the geopolitical risk landscape, with investors pricing in a lower probability of immediate supply shocks.