- Yemen's Houthis threaten naval blockade of Saudi Arabia
- Oil prices near $90/barrel
- Silver gains 5%
July 21 (Reuters) - Gold gained more than 1% on Tuesday as investors weighed reports of fresh mediation efforts in the Middle East, which could weigh on energy prices and tame jitters about higher-for-longer interest rates to contain inflation.
Spot gold gained 1.5% to $4,064.89 per ounce by 0911 GMT, while U.S gold futures for August delivery rose 1.4% to $4,069.70.
"Gold has been in search of a price floor after its epic rally in January this year when it hit an all-time high and there is some sense the worst in terms of a sell-off may now be behind us," independent analyst Ross Norman said.
"That said, gold does struggle to discover any upside momentum just now and caution remains the watchword," Norman added.
Oil prices edged higher on Tuesday, but had fallen 1% earlier in the session as markets weighed reports of mediation efforts between the U.S. and Iran against an exchange of fresh attacks between the two and threats of a naval blockade of Saudi Arabia by Yemen's Houthis.
A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage the interim deal.
Meanwhile, Yemen's Iran-aligned Houthis on Monday threatened to impose a naval blockade on Saudi Arabia, opening a potential new front in the war and raising the threat to global energy supplies and trade beyond the Gulf.
Lower oil prices can reduce inflationary pressures and the likelihood of central banks keeping interest rates elevated. While gold is seen as a long-term hedge against inflation, high interest rates raise the opportunity cost of holding the non-yielding metal.
Traders are now pricing in about a 63% chance of a rate hike in September, according to the CME FedWatch Tool.
Among other metals, spot silver rose 4.8% to $59.11 per ounce, platinum inched up 1.9% at $1,624.88, and palladium gained 2.3% to $1,281.75.
Reporting by Sukanya Mitra in Bengaluru; Editing by Ronojoy Mazumdar
Source: Reuters