Gold Prices Soar on Weaker Dollar Ahead of Fed Policy Decision

Gold prices surged on Monday as investors snapped up the precious metal in response to a weakening US dollar and easing geopolitical tensions. The yellow metal contracts for August delivery traded higher by Rs 984, or nearly 1%, to Rs 1,44,090 per 10 grams on the Multi Commodity Exchange.

The rise was driven by a weaker US dollar index, which made gold more attractive to overseas buyers, said Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd. The softer US dollar also led to a decline in crude oil prices of over 7% in both domestic and international markets.

Investors are now waiting with bated breath for the US Federal Reserve's policy decision later this week, which is expected to be the key driver for bullion prices in the near term. While swap markets continue to price a modest probability of a rate hike, market participants will also watch upcoming US inflation and labour market data.