FX.co ★ Gold Holds Small Gains

Gold traded above $4,510 per ounce on Monday as markets weighed cautious optimism over a possible diplomatic breakthrough against the persistent inflationary threat of a prolonged energy shock. President Trump has pointed to serious talks with what he described as a more reasonable regime in Iran, yet bullion remains highly sensitive to his simultaneous warnings that he could destroy Iranian oil and power infrastructure if a deal is not concluded soon.

Despite these headlines, gold is still down more than 15% from its March peak. Brent crude’s climb above $115 has reinforced expectations that elevated energy prices will constrain the Federal Reserve’s scope for aggressive rate cuts. At the same time, a stronger US dollar and a rebound in US Treasuries have curbed the appeal of non-yielding assets, even as continued Houthi attacks in the Red Sea keep geopolitical risk premiums elevated.

As investors weigh Mohamed El-Erian’s warnings about limited policy flexibility, the metal’s near-term trajectory remains closely tied to the outcome of these high-stakes negotiations.