Gold prices rose in Asian trade on Monday, helped by a softer U.S. dollar as investors trimmed expectations that the Federal Reserve will raise interest rates this year.
Spot gold increased 0.3% to $4,186.80 an ounce by 21:28 ET (01:28 GMT), while gold futures jumped 1.8% to $4,199.75/oz. The metal continued to recover after last week’s rebound from eight-month lows, and the dollar slipped to around two-week lows, supporting bullion’s advance.
Market moves followed a weak nonfarm payrolls report on Thursday, which prompted traders to sharply pare back bets that the Fed will have sufficient room to lift rates later this year. The labor market print helped shift expectations toward fewer or smaller rate increases, weighing on the dollar and boosting demand for non-yielding assets such as gold.
Policy drivers
Inflation and the labor market remain the central bank’s primary considerations when setting monetary policy. The article highlights that sticky U.S. inflation is widely expected to keep the Fed inclined toward a hawkish stance in the coming months. Higher interest rates are generally negative for gold because they raise the opportunity cost of holding non-yielding assets versus government debt - a key reason bullion has underperformed relative to earlier peaks this year.
The minutes from the Fed’s June meeting are due this week and are expected to provide additional insight into the likely path for interest rates, which market participants will watch closely for guidance on future policy moves.
Broader price pressures and inflation signals
Falling oil prices provided some relief to concerns about persistent inflation. Nonetheless, markets remain cautious about potential inflationary pressures from the artificial intelligence sector, and rising global temperatures were also noted as a factor that could contribute to higher price pressures.
Other precious metals
Precious metals broadly tracked gold’s gains on Monday. Spot silver rose 0.4% to $62.7350/oz, while spot platinum advanced 1.1% to $1,661.03/oz.
Although bullion posted a recovery last week, overall upside in gold has been limited by the prospect that sticky inflation will keep the Federal Reserve on a hawkish track, constraining larger and more sustained gains for the yellow metal.