Gold prices saw a slight increase on Monday, supported by a dip in oil prices. Investors are closely watching the Federal Reserve's potential interest rate hike later this year and seeking new signals about the central bank's policy direction. Spot gold rose 0.3% to $4,175.60 per ounce, while US gold futures for December delivery climbed 0.4% to $4,196.40.
Tim Waterer, chief market analyst at KCM Trade, noted that gold is benefiting from the softer tone in oil prices, which helps ease inflation concerns. He added that a more sustained decline in oil prices or a drop in yields would be positive catalysts for gold, as both would reduce inflation and rate worries.
Oil prices fell after US President Donald Trump waived sanctions and tariffs on Russia, potentially boosting Russian fuel exports. Meanwhile, US import prices rose more than expected in September, driven by higher energy costs and other goods, signaling persistent inflation pressures amid the Middle East conflict.
Market participants are awaiting the Federal Open Market Committee's meeting on US interest rates and the upcoming Personal Consumption Expenditures (PCE) data. Traders currently see a 16% chance of a rate hike this month and a 92% chance in December. Higher interest rates typically reduce the appeal of gold due to its non-yielding nature.
The European Central Bank is also expected to raise interest rates by 25 basis points at least once more this year to combat inflation, according to the International Monetary Fund. Other precious metals showed gains, with spot silver up 0.9% to $57.54 per ounce, platinum rising 0.7% to $1,642.29, and palladium climbing 1.5% to $1,129.13.