Gold prices climbed above $4,092 per ounce on Monday, reaching a record high as easing Middle East tensions, lower oil prices, and sustained central bank demand reinforced the precious metal's appeal as a safe-haven asset.

Gold Reaches New Record

Spot gold rose 1% to $4,092 per ounce, supported by falling oil prices that eased concerns over renewed inflation.

According to Reuters, the rally also followed signs of de-escalation between the United States and Iran after a senior Iranian official said Tehran would halt attacks on U.S. interests if Washington also suspended its military strikes.

The reduction in geopolitical tensions shifted market sentiment, helping push gold prices higher.

Markets Await Federal Reserve Decision

Investors are now focused on this week's U.S. Federal Reserve meeting.

While markets widely expect interest rates to remain unchanged, traders currently assign an 80% probability that the Fed will raise rates in September.

Gold futures also point to continued strength, with next month's delivery contracts trading near $4,112 per ounce, reflecting continued investor demand for the metal as a store of value.

Central Banks Continue Buying Gold

Despite volatile global markets, central banks have continued increasing their gold reserves.

According to the World Gold Council, central banks purchased nearly 300 tonnes of gold during the first six months of the year as part of efforts to protect national reserves against economic uncertainty and currency fluctuations.

Russia Sells Gold to Support War Spending

While many countries are accumulating gold, Russia has taken the opposite approach.

Facing Western sanctions imposed over the war in Ukraine, Moscow has been selling part of its gold reserves to help finance government spending and military operations.

Russia, the world's third-largest gold producer with annual output of about 300 tonnes, sold more than 44 tonnes of gold during the first half of the year, generating an estimated $6 billion.

According to the report, much of the gold has been absorbed by domestic banks because sanctions have limited Russia's access to international gold markets.

One of the World's Largest Gold Holders

Russia currently holds the world's fifth-largest official gold reserves, with 2,282 tonnes stored in its vaults.

At current market prices, those reserves are estimated to be worth approximately $293 billion.