Gold prices moved higher on Monday, supported by a weaker U.S. dollar after crude oil prices retreated on signs of easing geopolitical tensions in the Middle East. While the softer greenback boosted demand for precious metals, investors remained cautious ahead of a busy week of U.S. economic data that could influence expectations for Federal Reserve policy.
At 01:43 ET (05:43 GMT), spot gold (XAU/USD) gained 0.5% to $4,062.41 per ounce, while gold futures rose 0.3% to $4,117.35. Silver (XAG/USD) advanced 0.6% to $57.98 per ounce, and platinum (XPT/USD) climbed 0.3% to $1,650.18.
Middle East Diplomacy Pushes Oil Lower and Supports Precious Metals
Bullion found fresh buying interest after U.S. President Donald Trump said Iran and several Middle Eastern countries had requested additional time to complete an agreement aimed at reopening the Strait of Hormuz and addressing Tehran’s nuclear programme.
The announcement reduced market expectations of an immediate escalation in the region, triggering a decline of more than $5 per barrel in oil prices during Asian trading.
Lower energy prices eased concerns that prolonged supply disruptions could fuel inflation, reducing pressure for tighter monetary policy and improving sentiment toward gold.
The U.S. Dollar Index also extended its decline, falling below the 100 level to around 99.7. A weaker dollar makes gold priced in U.S. currency more affordable for international buyers, providing further support to bullion prices.
Federal Reserve Expectations Continue to Influence Gold
Despite Monday’s gains, investors remained cautious following comments from three Federal Reserve officials who dissented at last week’s policy meeting.
The policymakers reiterated on Friday that inflation remains above target and argued that an immediate interest rate increase would be necessary to preserve the central bank’s credibility in fighting inflation.
Higher interest rates generally reduce the appeal of non-yielding assets such as gold because they increase the opportunity cost of holding the metal instead of interest-bearing investments.
Analysts Watch Key Technical Levels
Tony Sycamore, senior market analyst at IG, said recent price performance has been weaker than expected despite his positive long-term outlook for gold.
“Our bias has been for gold prices to move higher in recent weeks, but the price action has been disappointing to say the least,” Sycamore said.
According to Sycamore, gold needs to break above resistance in the $4,110-$4,120 area before challenging the early July high of $4,202. A move above those levels would confirm that prices have established a base above the late-June low of $3,942 and that a broader recovery is underway.
Until then, he warned that the risk of another decline toward support at $3,942 remains elevated.
U.S. Economic Data Takes Centre Stage This Week
Investors are now preparing for several key U.S. economic releases that could shape expectations for the Federal Reserve’s next interest rate decision.
The week’s calendar includes the JOLTS job openings report, the ADP private payrolls survey, weekly initial jobless claims and Friday’s closely watched nonfarm payrolls report, all of which are expected to provide fresh insight into the strength of the U.S. labour market and the outlook for monetary policy.