Weaker US Dollar Drives Gold Prices Up Amid Fed Rate Uncertainty

Gold prices rose in European trading on Tuesday after the US dollar fell to a three-week low against a basket of global currencies. The decline in the US currency made dollar-denominated gold more attractive to buyers, driving up the price of gold by 0.85% to $4,443.06 an ounce.

The weaker US dollar was also reflected in the yield on the 10-year US Treasury note, which fell more than 0.25%. The Federal Reserve's interest rate path remains uncertain ahead of key inflation data due this week, with markets currently pricing a 40% probability of leaving rates unchanged at its September meeting and a 60% probability of a 25-basis-point hike.

The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, saw virtually no change in its holdings on Monday, remaining at 1,052.05 metric tons, the lowest level in a week. Despite this, analysts expect gold to remain in positive territory supported by the weaker US dollar.