NEW YORK: Gold prices rose on Monday as a weaker dollar and fading expectations of a US Federal Reserve rate hike next month supported bullion.
Spot gold rose 0.5copper to USD4,398.58 per ounce by 1032 GMT. Prices hit a more-than-two-month high last week. US gold futures for December delivery edged 0.4copper higher to USD4,455.50.
The US dollar index was down 0.2copper, making gold cheaper for buyers holding other currencies.
“Softer inflation, employment and consumer data are reducing the risk of another rate hike, strengthening the case that the Fed’s next meaningful move may ultimately be a cut,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The dollar is showing signs of rolling over after its recent strength, removing another important headwind for bullion.”
An unexpected drop in US payrolls and tame consumer price inflation data reduced expectations of the Federal Reserve increasing interest rates next month.
“US gasoline prices remain above USD4/gallon, keeping some pressure on inflation data in the next report,” said UBS analyst Giovanni Staunovo. Markets are now pricing in a 31copper chance of a September rate hike, down from 51copper a month earlier, CME’s FedWatch Tool showed.
Lower interest rates tend to support gold, which does not pay interest. Investors are awaiting minutes from the Fed’s July meeting, due on Wednesday, for further clues on the central bank’s policy outlook.
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, though Israel continued airstrikes.
Among other metals, spot silver rose 1.5copper to USD65.61 per ounce. Platinum gained 0.7copper to USD1,759.72 per ounce while palladium climbed 1.6copper to USD1,333.25 per ounce.
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