World gold prices jumped more than 1% in this afternoon's trading session, as bottom-fishing buying appeared around the psychological level of 4,000 USD/ounce, amid investors assessing the prospect of cooling down tensions between the US and Iran and the impact of oil prices on the interest rate roadmap of the US Federal Reserve (Fed).
As of 3:46 PM Vietnam time, spot gold prices increased by 1.21% to 4,061.00 USD/ounce, while August gold futures contracts increased by 1.2% to 4,064.27 USD/ounce.
This is also the highest level of gold prices in about a week after a series of fluctuations around the 4,000 USD/ounce range.
New developments appeared as the market recorded diplomatic signals related to the US-Iran conflict. According to published information, Tehran has received a proposal for a 10-day ceasefire to create a premise for further negotiations, although fighting between the two sides has not yet ended.
The prospect of de-escalation has cooled oil prices after two previous strong sessions. This partly eases concerns about the risk of increased inflation due to energy costs, thereby supporting sentiment in the gold market.
However, investors continue to monitor the Fed's monetary policy. Energy prices remain high and many Fed officials recently said that interest rates may need to be raised further if inflation does not decrease as expected.
According to data from CME FedWatch Tool, the market still leans towards the possibility that the Fed will keep interest rates unchanged in next week's meeting, but the probability of an interest rate hike in September is currently valued at around 62%.
In that context, the developments of gold prices are still simultaneously affected by two factors: inflation outlook associated with oil prices and expectations about the Fed's interest rate roadmap.
