Gold Prices Soar on Weaker Dollar and Dovish Fed Expectations

Gold prices surged to their highest level in over nine weeks on Tuesday, driven by a weaker US dollar and expectations of softer US economic data. The precious metal touched its peak since June 5, with spot gold up 0.5% or $22.60 at $4,413.16 an ounce.

The weaker US dollar has been a key factor supporting gold prices, as it makes the metal cheaper for buyers holding other currencies. Additionally, gold is often seen as a safe-haven asset when concerns about economic growth or monetary policy rise.

Softer-than-expected US jobs data last week reinforced expectations of a more dovish Federal Reserve monetary policy stance, providing further support to non-yielding assets like gold. Market expectations for a rate hike at the next Federal Open Market Committee meeting have eased, with the probability falling to around 65% from about 70% earlier.

Investors will now turn their attention to key US inflation data due later this week for fresh clues on the Federal Reserve's monetary policy outlook. The July consumer price index and producer price index readings could influence expectations around the Fed's next policy moves and determine the near-term direction of gold prices.