Summary of this article
Gold rose over Rs 1,100 as easing tensions lowered oil prices
A weaker dollar also supported demand for the precious metal
Investors now await the US Fed's policy decision and future rate outlook
Gold prices rose more than 1 per cent in early trade on July 27, 2026 as easing tensions in the West Asia dragged crude oil prices lower, softened inflation concerns and weakened the dollar, improving demand for the yellow metal ahead of US Federal Reserve policy meeting this week.
On the Multi Commodity Exchange (MCX), gold futures rose as much as Rs 1,124, or 0.78 per cent, to Rs 1,44,230 per 10 grams, as of 4:30 PM.
In the international market, spot gold gained 1.10 per cent to $4,096.20 per ounce, as of the same time, while US gold futures on the COMEX were up 0.90 per cent at $4,106 per ounce.
The rally came after hostilities between Iran and the US showed signs of easing over the weekend. Iran said it had halted retaliatory attacks against Washington's allies in the West Asia, while US Ambassador to the United Nations Mike Waltz said President Donald Trump was allowing negotiations some time to progress.
The development came after 13 consecutive nights of US strikes on Iran, which ended on July 23. There were no reported bombings on July 24 and July 25 nights, offering some relief to global energy markets.
Brent crude oil prices fell nearly 13 per cent on July 27 to trade below $86 per barrel. Since the conflict escalated earlier this year, higher oil prices had fuelled inflation worries and strengthened expectations of tighter monetary policy, limiting gold's appeal as a non-yielding asset.
Manav Modi, commodities analyst at Motilal Oswal Financial Services, said softer crude prices eased near-term inflation concerns even as uncertainty over global trade remained after the US imposed fresh tariffs of 10 per cent to 12.5 per cent on imports from several trading partners.
"The weaker US Dollar Index further supported bullion by making it more attractive for overseas buyers," he said.
The US Dollar index, which measure the greenback against a basket of world's six major currencies, slipped as much as 0.34 per cent to 101.12 level, making dollar-denominated gold cheaper for buyers using other currencies and supporting bullion prices.
Investors are now focused on the outcome of the US Federal Reserve's policy meeting, due on July 29. The central bank is widely expected to leave interest rates unchanged at 3.50-3.75 per cent. According to the CME FedWatch Tool, markets are assigning a 64.20 per cent probability to the Fed maintaining the status quo.
The focus, however, will be on the central bank's guidance for the months ahead. For the September meeting, traders are pricing in a 78.70 per cent chance of a rate hike, including a 54.8 per cent probability of a 25-basis-point increase and a 23.90 per cent chance of a larger 50-bais-point hike.
Modi said investors will closely monitor Fed Chair Kevin Warsh's comments for clues on inflation and the future interest rate trajectory. He added that upcoming US inflation and labour market data, along with the Fed's policy outcome, are likely to determine the near-term direction of gold prices.
