The pause in hostilities between the US and Iran leads to a sharp drop in oil prices, while gold rises over 1% boosted by a weaker dollar.

1. During Asian trading hours on Monday, international gold prices rose significantly, with spot gold once climbing 1.5% to $4,115.89 per ounce, currently trading near the $4,100 mark. Previously, the United States and Iran suspended military confrontation over the weekend, causing international oil prices to plunge in response. As a result, market concerns about inflationary pressure and prolonged high interest rates eased, boosting the demand for gold as a safe haven and hedge against inflation.2. An Iranian senior official stated on Sunday that as long as the United States stopped its attacks, Iran would also suspend its retaliatory actions. Subsequently, the U.S. side confirmed the suspension of airstrikes, with reports suggesting the decision was partly due to the dwindling number of viable targets and concerns about ammunition stockpile depletion.3. Oil prices plummeted more than 6% in early trading on Monday as investors’ expectations for diplomatic solutions to ease the conflict increased. The sharp pullback in crude oil prices helps alleviate global inflation concerns, which in turn reduces pressure for further tightening of monetary policy. Although gold is traditionally seen as a hedge against inflation, its appeal is typically suppressed in a high interest rate environment, so the current moderation of rate expectations due to falling oil prices is instead providing support for gold prices.5. Meanwhile, both the U.S. Dollar Index and the yield on 10-year U.S. Treasury bonds declined, further fueling gold’s rally. The market generally expects the Federal Reserve to maintain interest rates unchanged this week, but according to the CME FedWatch tool, traders still see around an 80% probability of a rate hike in September.6. According to data from the U.S. Commodity Futures Trading Commission, as of the week ending July 21, net long positions held by speculators in COMEX gold futures increased by 4,438 contracts to 123,586 contracts, indicating a warming bullish sentiment in the market.