Dollar Softening Boosts Gold Amid Slowing Rate Hike Expectations

Gold prices edged higher on Monday in early Asian trading as the US dollar softened. The spot price of gold rose 0.3% to $4,388.62 an ounce.

This increase is partly attributed to a 0.1% decline in the US dollar index, making dollar-priced metals cheaper for buyers using other currencies.

Another key factor contributing to the rise in gold prices is the decrease in interest-rate expectations. The CME FedWatch Tool shows markets pricing a 33% chance of a September rate hike, down from 47% a month ago. This is significant because gold doesn't pay interest, making it more appealing when investors expect lower interest rates and real yields.

The next critical event will be the Federal Reserve's July meeting minutes on Wednesday. Investors will closely examine these minutes for hints on whether officials are leaning towards 'higher for longer' rates or becoming more comfortable waiting.