Gold rises above $4,080 as U.S.-Iran deal hopes weaken dollar

Spot gold rose 1.8% to $4,081.07 an ounce on July 21, rebounding after repeatedly testing the $4,000 support level through the prior week.

"Iran's openness to talks pulled bond yields lower and weakened the dollar, giving gold a bid after it held the $4,000 floor," a strategist at Tickmill said.

COMEX gold futures gained 1.7% to settle at $4,085.37. The rally followed Iran's Foreign Ministry statement that it had received mediator proposals about the conflict with the U.S. and that negotiations could be pursued based on national interests, according to Mehr News Agency. Spot silver jumped 4.3% to $58.84 an ounce, while platinum added 1.6% to $1,628.90.

Gold had defended the $4,000 level through four separate tests since mid-July as U.S.-Iran military strikes entered their 10th consecutive day, with the U.S. targeting Iranian command centers and air defense sites while Iran struck U.S. bases in Jordan and Kuwait. The next major resistance sits at $4,200, according to David Morrison, senior market analyst at Trade Nation, while a break below $4,000 would weaken the bullish structure. The Federal Reserve's July 29 policy decision is the next macro catalyst, with markets pricing a 55% probability of a 25-basis-point rate hike in September, CME FedWatch data shows.

Iran diplomacy shifts the macro backdrop

Iran's diplomatic signal marked a departure from the prior week's escalation, during which three U.S. service members were killed in separate incidents in Jordan and Iraq. Brent crude eased from session highs to $91.24 a barrel, still up 2.3%, as traders weighed the prospect of de-escalation against ongoing Houthi threats to Red Sea shipping. U.S. gasoline prices crossed $4 a gallon for the first time since the conflict began, AAA data showed.

Fed Chair Kevin Warsh's comment that inflation risks have eased added further support for gold by reducing the opportunity cost of holding the non-yielding asset. The 10-year Treasury yield edged lower, and the Bloomberg Dollar Spot Index weakened, creating a tailwind for bullion.

Gold miners track the rebound

Newmont Corp., the world's largest gold producer, rose 2.5% in pre-market trading to $91.39, benefiting from the metal's recovery ahead of its July 23 earnings report. Analysts project second-quarter earnings per share of $1.99 to $2.20, representing roughly 54% year-over-year growth, according to consensus estimates compiled by Investing.com. Barrick Mining has shed about 13.7% over the past month, suggesting the broader gold mining complex is recovering alongside bullion's rebound from recent lows.

This article is for informational purposes only and does not constitute investment advice.