Gold prices remained near their all-time highs on Monday, buoyed by a weakening U.S. dollar, while investors closely monitored inflation data expected later this week to assess the Federal Reserve’s potential interest rate trajectory.
Meanwhile, U.S. gold futures registered a 0.3% increase, reaching $2,961.80 per ounce.
Market analysts attributed the sustained strength in gold to a weakening U.S. dollar, which has made the metal more attractive for investors using other currencies.
Han Tan, Chief Market Analyst at Exinity Group, highlighted that a continued decline in the dollar index has allowed gold prices to remain elevated, further supported by rising inflows into bullion-backed exchange-traded funds (ETFs), as mentioned in a report by Reuters.
This trend reflects growing interest in gold as a safe-haven investment amid global economic uncertainty.
The U.S. dollar index (.DXY) remained flat, which has kept gold’s appeal strong, particularly among investors looking to hedge against currency fluctuations.
Market participants are now increasingly focused on whether gold could breach the $3,000 per ounce threshold in the near future.
However, analysts caution that higher interest rates could limit gold’s upside potential. Since gold is a non-yielding asset, rising interest rates reduce its attractiveness compared to interest-bearing investments.
“Bullion bulls appear to be waiting for further clarity before attempting to push gold beyond the $3,000 mark. The timing of the Federal Reserve’s first rate cut remains uncertain, with traders now anticipating a move in September,” Tan noted.
A lower-than-expected inflation reading could increase expectations for an earlier rate cut, potentially driving gold prices even higher. Conversely, a higher inflation print could delay the central bank’s easing measures, putting pressure on gold.
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Gold Prices Hold Steady Near Record Highs
Spot gold prices rose 0.4% to $2,947 per ounce as of 1211 GMT, inching closer to last week’s historic peak of $2,954.69.Meanwhile, U.S. gold futures registered a 0.3% increase, reaching $2,961.80 per ounce.
Market analysts attributed the sustained strength in gold to a weakening U.S. dollar, which has made the metal more attractive for investors using other currencies.
Han Tan, Chief Market Analyst at Exinity Group, highlighted that a continued decline in the dollar index has allowed gold prices to remain elevated, further supported by rising inflows into bullion-backed exchange-traded funds (ETFs), as mentioned in a report by Reuters.
Strong ETF Inflows Signal Bullish Sentiment
Investor demand for gold-backed assets has surged in recent weeks. The SPDR Gold Trust, the world’s largest gold-backed ETF, reported an increase in its holdings to 904.38 tonnes on Friday, the highest level since August 2023.This trend reflects growing interest in gold as a safe-haven investment amid global economic uncertainty.
The U.S. dollar index (.DXY) remained flat, which has kept gold’s appeal strong, particularly among investors looking to hedge against currency fluctuations.
Tariff Concerns, Fed Policy Drive Market Sentiment
The recent rally in gold prices was also fueled by trade policy concerns, particularly U.S. President Donald Trump’s proposed tariff measures, which pushed prices above the historic $2,950 per ounce mark last week.Market participants are now increasingly focused on whether gold could breach the $3,000 per ounce threshold in the near future.
However, analysts caution that higher interest rates could limit gold’s upside potential. Since gold is a non-yielding asset, rising interest rates reduce its attractiveness compared to interest-bearing investments.
“Bullion bulls appear to be waiting for further clarity before attempting to push gold beyond the $3,000 mark. The timing of the Federal Reserve’s first rate cut remains uncertain, with traders now anticipating a move in September,” Tan noted.
Upcoming Inflation Data in Focus
Investors are now looking ahead to the Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred measure of inflation, which is set to be released on Friday. The data is expected to provide further insight into the Fed’s monetary policy stance.A lower-than-expected inflation reading could increase expectations for an earlier rate cut, potentially driving gold prices even higher. Conversely, a higher inflation print could delay the central bank’s easing measures, putting pressure on gold.
Other Precious Metals See Mixed Trends
Beyond gold, other precious metals experienced mixed movements in the market:- Silver fell 0.3% to $32.45 per ounce.
- Platinum declined 0.5%, trading at $964.75 per ounce.
- Palladium registered a sharper decline of 1.2%, settling at $957.54 per ounce.
FAQs
Is gold cheaper in USA than India?
Yes, gold is generally cheaper in the United States than in India.In which country is gold the cheapest?
Gold is cheapest in countries like Australia, Malawi, Colombia, and Indonesia.Disclaimer Statement: This content is authored by a 3rd party. The views expressed here are that of the respective authors/ entities and do not represent the views of Economic Times (ET). ET does not guarantee, vouch for or endorse any of its contents nor is responsible for them in any manner whatsoever. Please take all steps necessary to ascertain that any information and content provided is correct, updated, and verified. ET hereby disclaims any and all warranties, express or implied, relating to the report and any content therein.
