Gold moved modestly higher on Monday as traders evaluated conflicting signals on global energy flows and geopolitical risk. At 20:30 ET (00:30 GMT), XAU/USD was up 0.3% at $4,206.86 an ounce, following a 1.3% rise the previous week. XAG/USD advanced 0.6% to $60.99. Platinum and palladium also posted gains. Benchmark Brent crude futures fell 1.2%.
Market participants reacted to a claim by U.S. President Donald Trump that an energy ceasefire between Russia and Ukraine had taken effect immediately, a development that could ease concerns around fuel supplies. Mr. Trump said he had urged Ukrainian President Volodymyr Zelenskyy to stop attacks on Russian oil refineries and that Moscow had agreed to release diesel into global markets, potentially easing the risk of a fuel shortage.
That positive signal was offset by ongoing violence in the Middle East. Houthi rebels launched an attack on Saudi Arabia’s main airport, King Khalid International Airport in Riyadh, on Sunday. The strike followed an earlier attack on the facility that killed 12 people and injured more than 300, and the Saturday incident was described as the deadliest in Saudi Arabia since the Iran war began in late February. The Houthis characterized their actions as retaliation for what they termed Saudi aggression, including a strike on the airport in Yemen’s capital, Sanaa.
Officials and market watchers said the renewed Mideast attacks have raised the prospect of a wider regional spillover that could push energy prices higher and increase inflationary pressure - a dynamic that normally strengthens the case for tighter monetary policy. That mix of potential downward pressure on fuel costs from the reported Russia-Ukraine truce, and upward pressure from fresh Mideast violence, left gold trading with limited directional momentum.
Gold's recent path has been shaped by competing forces. Although oil has eased, the precious metal has lost about a fifth of its value since the U.S.-Iran war erupted in late February. Higher energy costs and the risk of broader inflation have prompted some central banks to raise interest rates, which acts as a headwind for gold because it does not yield interest.
Support for bullion has come from rising investment demand, according to ANZ analysts. They noted that inflows into gold-backed exchange-traded funds hit a four-year high, citing Bloomberg data. The analysts attributed investor interest in part to mounting fiscal pressures globally, particularly concerns about the cost of servicing government debt and money supply dynamics. Central banks have also continued to increase their gold holdings.
In a notable central bank purchase, the People’s Bank of China added 740,000 ounces to its reserves in September, marking its 23rd consecutive month of buying.
ANZ cautioned that inflation risks might limit further upside in gold if they lead the Federal Reserve to tighten policy further. The firm highlighted the persistent prospect of higher interest rates as a constraint, since yield-bearing assets become more attractive when borrowing costs rise.
Traders said the outlook for gold will continue to hinge on developments in two theatres - the Russia-Ukraine conflict and energy flows out of the Middle East - as well as incoming data and central bank policy responses that shape the inflation and interest-rate outlook. For now, these competing forces are keeping precious metals markets on edge.