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Gold prices rose 1.40% to $4,497 per ounce as the US Dollar weakened following a ceasefire agreement between Israel and Lebanon brokered by the United States. The development reduced geopolitical tensions in the Middle East, increasing demand for safe-haven assets like gold. The ceasefire, seen as a diplomatic breakthrough, also boosted speculation about a potential US-Iran deal, further supporting gold's appeal.
The weakening USD, driven by reduced safe-haven demand, pressured the Dollar index to decline. This inverse relationship between gold and the USD is a key dynamic for traders, as Dollar weakness typically makes gold more attractive to holders of other currencies. Geopolitical stability in the region could shift investor focus toward risk-on assets, potentially capping gold's gains.
Market participants will now watch for updates on US-Iran negotiations and upcoming US economic data, which could influence the USD's trajectory. Central bank policies and inflation expectations will also remain critical factors. Traders should monitor the 4,500 level as a potential resistance for gold, with a break above this level signaling stronger bullish momentum.
