Washington, DC – Gold prices edged higher on Monday, primarily supported by a weaker US dollar. Recent disappointing economic data also weighed on market expectations, significantly reducing the likelihood of a Federal Reserve interest rate hike next month.
Performance of spot and futures gold contracts
In detail, spot gold prices rose slightly by 0.4% to $4,391.07 per ounce by 2:48 GMT. This positive performance follows prices reaching their highest level in over two months last week. Similarly, US gold futures for December delivery climbed 0.3%, settling at $4,448.10 per ounce, reflecting continued buying momentum for the precious metal amidst prevailing uncertainty in global markets.
The rise in prices extends to other precious metals.
The gains weren’t limited to gold; the entire precious metals sector saw a surge. Silver rose 1.4% to $65.53 an ounce, while platinum climbed 0.3% to $1,752.36, and palladium recorded the largest increase, rising 1.6% to $1,333.35 an ounce.
Impact of the dollar’s decline and US economic data
A slight 0.1% decline in the dollar index provided additional support for prices, as this drop made dollar-denominated gold more attractive and less expensive for holders of other currencies. In the same economic context, recent US data confirmed a slowdown in inflationary pressures. Non-farm payrolls fell in July, along with other weak economic indicators.
These developments have led to a sharp decline in the probability of a US interest rate hike at the upcoming September meeting, dropping to just 30%, compared to approximately 47% in the previous month, according to the latest readings from FedWatch, a tool developed by the Chicago-based CME Group. Investors and analysts are now focused on the release of the minutes from the Federal Reserve’s July meeting this coming Wednesday, seeking any new indicators or signals that might clarify the future direction of US monetary policy.
