Gold Hits Two-Month High as Dollar Weakens and Fed Rate Hike Odds Decline

Gold prices extended their two-week advance on Monday, reaching a two-month high of $4,399.44 per ounce. The metal's gain was led by a weaker US dollar, which declined 0.2% to 99.49. This makes dollar-denominated bullion cheaper for buyers using other currencies.

The move in gold prices was also influenced by the Federal Reserve's policy outlook. Last week's inflation data showed that core producer prices increased less than expected, providing evidence that inflationary pressures are not broadly intensifying. This tipped the balance towards a Federal Reserve hold in September and knocked the dollar index 0.4% lower on Friday.

Gold has been trading within a range of $3,959.69 to $4,450.23 over the past month, averaging $4,158.25 for a gain of 7.74%. The metal's performance splits sharply by lookback period, with a 31% annual gain but only a 1.10% calendar-year advance.