Gold prices rose during Asian trading on Monday, supported by a weaker dollar as investors scaled back expectations for a Federal Reserve interest rate hike this year.
The yellow metal continued its recovery after bouncing off eight-month lows last week, while the dollar fell to its lowest levels in nearly two weeks.
Spot gold increased by 0.3% to $4,186.80 per ounce as of 04:28, while gold futures gained 1.8%, reaching $4,199.75 per ounce.
The uptick in gold prices followed weak non-farm payroll data released on Thursday, which triggered a sharp reduction in bets that the Fed would have sufficient grounds to raise interest rates this year.
Inflation and the state of the labor market are the two primary factors the central bank considers when adjusting rates. Persistent inflation in the US is expected to keep the regulator in a hawkish stance in the coming months.
High interest rates are negative for gold because they increase the opportunity cost of investing in non-yielding assets compared to government bonds. This factor has put significant pressure on gold this year, dragging the yellow metal well below the record highs seen in January.
This week, the minutes of the Fed’s June meeting are expected to be released, which should provide clearer insight into the future direction of interest rates.
Although bullion recovered last week, overall gains remain capped by the prospect of a continued hawkish Fed stance amid stubborn inflation.
A drop in oil prices has partly helped calm fears about persistent inflation. However, markets remain cautious due to the inflationary impact of the artificial intelligence industry, and rising global temperatures are also expected to contribute to increased price pressures.
Other precious metals also advanced on Monday, following gold’s lead. Spot silver added 0.4%, reaching $62.7350 per ounce, while spot platinum rose by 1.1% to $1,661.03 per ounce.
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