Gold prices edged higher on Monday, as the dollar extended its slide after recent US economic data boosted bets that the Federal Reserve was done with its interest rate hikes.
Spot gold rose 0.1% to $1,981.79 per ounce as of 0306 GMT, after rising 2.2% last week. US gold futures were steady at $1,984.40.
“We’ve seen a pretty significant narrative shift over the last week or so in the markets on the Fed policy and when the Fed will cut interest rates first and how aggressively it will be cutting rates,” said Kyle Rodda, a financial market analyst at Capital.com.
“On the flip side, still seeing a fairly significant divergence in terms of where gold is trading at the moment with real yields… we’re going to need much weaker data from here to really kind of catalyze that move above $2,000 per ounce.”
Data pointing to a slowing jobs market in the US and a weaker-than-expected consumer inflation report last week lifted hopes that the Fed could begin easing monetary conditions sooner than expected.
The dollar slipped 0.2% to a more than a 2-1/2 month low against its rivals, making gold less expensive for other currency holders.
Traders now widely expect the Fed to leave rates unchanged at its Dec. 12-13 policy meeting, according to the CME FedWatch tool. Lower rates exert downward pressure on the dollar and bond yields, enhancing the appeal of non-yielding bullion.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.49% to 883.43 tonnes on Friday.
Investors now look forward to minutes from the US central bank’s last meeting later this week for more clarity on its interest rate path. Spot silver dipped 0.4% to $23.64 per ounce, while platinum rose 0.3% to $901.88 and palladium gained 0.3% to $1,056.41 per ounce.