Gold edged higher on Monday, holding above the $4,200-an-ounce threshold, as investors balanced an announced halt to energy infrastructure attacks between Russia and Ukraine against a fresh wave of violence in the Middle East that threatens to reignite inflation.
Spot bullion rose 0.3% to $4,206.86 an ounce as of 8:30 a.m. in Singapore, building on last week's 1.3% advance. Silver climbed 0.6% to $60.99 an ounce, while platinum and palladium also posted gains. The Bloomberg Dollar Spot Index slipped modestly.
The muted move in gold reflected two competing forces. President Donald Trump said the energy truce between Moscow and Kyiv took effect immediately, a development that pulled benchmark Brent crude down 1.2% and eased concerns about a fuel supply crunch. He had previously pressed Ukrainian President Volodymyr Zelenskyy to stop strikes on Russian oil refineries and said the Kremlin agreed to release diesel into global markets.
Yet any relief from that announcement was offset by renewed hostilities in the Gulf. Houthi rebels struck King Khalid International Airport in Riyadh for a second consecutive day on Sunday, a day after an assault on the facility killed 12 people and wounded more than 300. That Saturday attack was the deadliest in Saudi Arabia since the U.S.-Iran war began in late February.
The Houthis framed their campaign as retaliation for what they described as Saudi aggression, including a strike on the airport in Yemen's capital, Sanaa. The escalating tit-for-tat has raised the specter of a broader regional conflict that could push energy prices higher and strengthen the case for tighter monetary policy.
That dynamic has been a persistent headwind for gold. Since the U.S.-Iran war erupted, rising energy costs and the threat of global inflation have prompted some central banks to raise interest rates, diminishing the appeal of a non-yielding asset. The precious metal has lost roughly a fifth of its value since the conflict began.
Still, structural demand remains robust. ANZ analysts noted that gold's recent performance has been underpinned by rising investment demand, with inflows into gold-backed exchange-traded funds reaching a four-year high. They attributed the interest to mounting fiscal pressures worldwide, particularly concerns about government debt-servicing costs and money supply expansion.
Central banks have continued to bolster their reserves. The People's Bank of China added 740,000 ounces in September, extending its buying streak to 23 consecutive months.
ANZ cautioned, however, that inflation risks could cap further gains if they prompt the Federal Reserve to tighten policy more aggressively. Higher borrowing costs make yield-bearing assets comparatively more attractive, a recurring concern for gold investors.
Traders will keep monitoring developments on both fronts: the durability of the Russia-Ukraine energy ceasefire and the trajectory of Middle East energy flows against the backdrop of inflation and monetary policy expectations.