Gold prices climbed on Monday after recording a weekly drop, with traders turning cautious ahead of the Federal Reserve’s interest rate decision set for later this week. The story of gold's rebound reflects not just market shifts, but also how investors are responding to inflation concerns, global trade worries, and U.S. dollar movements — all while keeping their eyes on the Fed.

Spot gold rose 0.6% to $3,259.29 per ounce on May 5, while U.S. gold futures also gained 0.8%, reaching $3,267.70, according to Bloomberg. This uptick comes after gold fell 2.4% last week, showing just how sensitive the metal is to policy signals and global uncertainty.

Why are gold prices climbing after last week’s dip?

The key reason behind this rebound is a weakening U.S. dollar. As the dollar slipped 0.4% since its last close, gold — which is priced in dollars — became cheaper for buyers using other currencies. That gave it a boost.

At the same time, investors are treading carefully as they wait for the Federal Reserve's decision on interest rates. The market largely expects the Fed to hold rates steady, but any surprise could cause sudden moves across assets — and gold is often one of the first to react.

What role is the Federal Reserve playing in gold’s movement?

Right now, the Fed is in the spotlight. It’s expected to leave interest rates unchanged during its meeting this week. Deutsche Bank predicts no rate cuts until December, while Goldman Sachs says the central bank needs more signs of cooling inflation before it acts.

Traders are pricing in about 80 basis points of rate cuts beginning in July. Until then, gold could stay within a narrow range — likely between $3,200 and $3,350, according to market analysts cited by Reuters.

Is global economic uncertainty helping gold stay strong?

Yes, and it’s playing a bigger role than many expected. There’s growing concern over a possible economic slowdown and the ripple effects of new trade policies. For example, President Donald Trump just announced a 100% tariff on foreign-made movies, a move that has reignited global trade tensions.

With that kind of uncertainty in the air, many investors are moving toward gold as a safe-haven asset. That’s a common pattern during times of geopolitical or economic stress — gold tends to hold its value even when other assets falter.

How are other metals performing alongside gold?

It’s not just gold making gains. Other precious metals also inched up on Monday. Silver went up 1.1% to $32.33 an ounce. Platinum edged slightly higher to $961.20, and palladium rose 0.5% to reach $958.38.

These moves suggest a broader interest in commodities as protection against inflation and currency risks, especially when equity markets are jittery.

What can traders expect next for gold prices?

As the Fed prepares to release its rate decision, most analysts believe gold will remain in a tight trading zone. If the Fed signals that cuts are coming later this year, we might see gold edge higher again.

For now, traders are watching every word from the Fed for clues. With inflation still high and mixed economic signals, gold remains a key asset for investors trying to hedge against uncertainty.

FAQs:

Q1. Why are gold prices rising ahead of the Fed decision?
Gold prices are climbing due to a weaker dollar and inflation concerns before the Fed's rate update.

Q2. Will gold prices go above $3,300 again this week?
Analysts say gold could cross $3,300 if the Fed hints at future rate cuts.