Gold, Silver Rise as Soft Data Cuts Fed-Hike Odds

Gold and silver prices have surged in early US trading on Monday, driven by a softer US dollar and reduced expectations of Federal Reserve rate hikes. The spot price of gold is near $4,394.70 an ounce, up 0.44%, while spot silver is trading at $65.430, up 1.32% on the session.

The latest positioning still favors a September Fed hold, but Monday's Empire State survey added a firmer activity and price-pressure signal to otherwise softer data. The New York Fed's general business conditions index rose 5 points to 20.6 in August, its highest reading in more than four years, while new orders printed at 17.3, shipments at 11.7, and prices paid rose 6 points to 58.6.

This strength follows last week's weaker July retail sales, softer CPI, flat headline PPI, and weaker consumer sentiment, leaving markets with roughly a 30% to 31% probability of a September rate hike. The next key catalysts are the Fed's July meeting minutes on Wednesday at 2 p.m. ET, housing data, and Friday's flash PMI readings.

The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations, and defensive demand. Iran is close to finalizing an understanding with Oman on a transit route through the strait, but the US is not part of those talks and continues to demand unrestricted passage. Oil prices are firmer as the market prices a renewed supply-risk premium.

For gold, the setup remains two-sided: weaker Fed-hike pricing and a softer dollar support the metal, while any further oil spike would keep inflation risk alive and limit the rally through the yields channel.