Gold prices rose on Monday, supported by lower oil prices as investors assessed the prospects for US Federal Reserve interest rate hikes this year and awaited fresh signals on the course of monetary policy.
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Spot gold rose 0.3% to $4,175.60 an ounce by 02:59 GMT, while US gold futures for December delivery gained 0.4% to $4,196.40.
Tim Waterer, a market analyst at KCM Trade, said gold posted a modest gain at the start of the week, benefiting from lower oil prices, which ease inflationary pressures.
He added that continued declines in oil prices or a more pronounced drop in bond yields could support gold in the near term by easing concerns over inflation and interest rates.
Oil prices fell on Monday after US President Donald Trump exempted Russia from sanctions and tariffs, a move that could allow Russian fuel exports to increase.
Meanwhile, US import prices rose more than expected in September, driven by higher costs for energy products and other goods, adding to signs of mounting inflationary pressures amid the ongoing conflict in the Middle East.
Investors are awaiting next week’s Federal Open Market Committee meeting on interest rates and the release of personal consumption expenditures data. The Federal Reserve relies on the data to assess inflation and work toward keeping it at its 2% target.
The CME Group’s FedWatch tool showed markets pricing in a 16% probability of an interest rate hike this month and a 92% probability of a rate increase in December.
Although gold is considered a hedge against inflation, higher interest rates reduce its appeal because the metal does not generate income.
Separately, the International Monetary Fund said on Friday that the European Central Bank is likely to raise interest rates by another 25 basis points at least once this year to counter inflationary pressures.
Among other precious metals, spot silver rose 0.9% to $57.54 an ounce, platinum gained 0.7% to $1,642.29, while palladium increased 1.5% to $1,129.13.
Source: Reuters
