Gold gains on weaker dollar, reduced Fed rate-hike bets

Gold drifted higher on Monday, supported by a weaker dollar and recent soft economic data that reduced expectations for a US interest rate hike next month.

Spot gold rose 0.4% to $4,391.07 per ounce by 0248 GMT. Prices hit a more than two-month high last week. US gold futures for December delivery edged 0.3% higher to $4,448.10.

The US dollar index was down 0.1%, making greenback-priced metals more affordable for other currency holders.

“Gold has taken the ball and run with it to start the week, with soft inflation numbers keeping the US dollar under pressure and giving gold extra headroom to push towards the $4,400 level,” said Tim Waterer, chief market analyst at KCM Trade.

“A sustained move above $4,500 would likely need additional dollar weakness or a clearer pullback in energy prices.”

Oil hangs onto gains as US-Iran peace talks stall, Hormuz shipping slows

An unexpected decline in US nonfarm payrolls in July, coupled with data showing only mild consumer price inflation, has reduced expectations that the US Federal Reserve will raise interest rates next month.

Traders are now pricing in a 30% chance of a September rate hike, down from 47% a month earlier, CME’s FedWatch Tool showed.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion, enhancing its appeal to investors.

Markets are now awaiting minutes of the Fed’s July meeting, due on Wednesday, for further clues on policymakers’ monetary stance.

Yen edges up as traders push back Fed rate hike bets

On the geopolitical front, US President Donald Trump’s envoys met with Egyptian, Qatari and Turkish mediators in Cairo on Sunday, a diplomatic source said, aiming to advance his Gaza peace plan, even as Israel pressed on with airstrikes in the enclave.

Among other metals, spot silver rose 1.4% to $65.53 per ounce.

Platinum climbed 0.3% to $1,752.36, while palladium gained 1.6% to $1,333.35.