Gold prices firmed slightly in early Asian trade on Monday, helped by a weakening U.S. dollar that hovered near its lowest level in more than a month. Growing confidence that the Federal Reserve will cut interest rates this week continued to underpin the market, although gains remained restrained by broader investor caution.
Spot gold rose 0.3% to $4,208.55 an ounce by 03:28 ET (08:28 GMT), while February U.S. gold futures slipped 0.3% to $4,2371.10.
Dollar weakness lends support, but traders remain wary
The softer dollar has boosted the relative attractiveness of gold for international buyers, as currency weakness typically lowers the metal’s effective price in global markets.
The shift in the dollar is being driven largely by heightened expectations of a quarter-point rate cut at the Fed’s Dec. 9–10 meeting. Market sentiment tilted further toward easing after a series of soft economic indicators and Friday’s downtick in inflation signaled diminishing price pressures.
Recent data — including weaker private payrolls and signs of slowing labor-market momentum — have strengthened bets that the Fed is preparing to loosen policy.
The delayed release of the Fed’s preferred inflation gauge, the core PCE index, also showed only a modest month-to-month increase and a continuing slowdown in its annual reading.
Lower rates typically reduce the opportunity cost of holding non-yielding assets like gold. A subdued dollar compounds this support by improving affordability for foreign buyers. Still, bullion’s upside remained limited as Treasury yields have crept higher in recent sessions, offsetting some of the benefits from the currency move.
Uncertainty around the Fed’s communication has added to caution. While markets lean heavily toward an imminent rate cut, recent remarks from Fed officials have been mixed, with some warning against moving too quickly. This divergence has left traders alert to the possibility of a less-dovish outcome than anticipated.
Investors are now turning their attention to Wednesday’s policy announcement and Fed Chair Jerome Powell’s press conference for clearer signals on the path ahead.
Metals trade narrowly as markets await clarity
Precious and industrial metals were mostly muted in early trade as participants opted for a defensive stance before the Fed’s decision.
Silver futures fell 0.6% to $58.708 per ounce, while platinum futures eased 0.3% to $1,663.60 per ounce.
On the industrial side, benchmark copper on the London Metal Exchange edged up 0.3% to $11,681.20 a ton, whereas U.S. copper futures dipped 0.7% to $4.67 a pound.