Gold Rises as Dollar Softens and Rate Hike Expectations Ease

Gold prices rose in Asian trading on Monday, extending last week's rebound from eight-month lows, as a weaker U.S. dollar and easing expectations for additional Federal Reserve policy tightening provided support for the precious metal.

Market Reaction

Spot gold gained 0.3% to US$4,186.80 per ounce by 21:28 ET (01:28 GMT), while gold futures rose 1.8% to US$4,199.75 per ounce. The U.S. dollar eased to near two-week lows, supporting bullion prices. Other precious metals also advanced, with spot silver rising 0.4% to US$62.7350 per ounce and spot platinum climbing 1.1% to US$1,661.03 per ounce.

Fundamental Drivers

The rebound followed a weaker-than-expected June U.S. nonfarm payrolls report, after which market pricing reflected reduced expectations for additional Federal Reserve rate increases this year. Inflation and labor market conditions remain central to the Fed's policy assessment, while many analysts expect persistent inflation pressures to keep policymakers cautious in the coming months.

Higher interest rates generally weigh on gold prices by increasing the opportunity cost of holding non-yielding assets relative to interest-bearing investments such as government bonds. That dynamic has weighed on bullion prices for much of this year compared with the record highs reached in January.

Lower oil prices have helped ease some inflation concerns, although markets continue to monitor broader price pressures, including energy demand associated with expanding artificial intelligence infrastructure and weather-related cost risks.

What's Next

Minutes from the Federal Reserve's June policy meeting, due later this week, are expected to provide additional insight into policymakers' views on inflation and interest rates and could influence the near-term direction of both gold and the U.S. dollar.