Gold prices climbed on Monday, supported by a weaker dollar and lower oil prices. Investors are awaiting key U.S. inflation data this week, which could influence the Federal Reserve's next policy move. Spot gold rose 0.3% to $4,206.01 per ounce, while U.S. gold futures for December delivery gained 0.3% to $4,230.40.
Tim Waterer, chief market analyst at KCM Trade, noted that softer oil prices and a subdued dollar created a favorable environment for gold. The drop in oil prices eased some inflation and interest rate concerns, making gold more appealing from a yield perspective. U.S. President Donald Trump's announcement of an energy ceasefire between Russia and Ukraine contributed to the decline in oil prices, although Ukrainian leader Volodymyr Zelenskiy awaited further details.
The dollar's muted performance made gold more affordable for buyers holding other currencies. While gold is often seen as a hedge against inflation, higher interest rates tend to reduce its appeal due to its lack of yield. Traders are closely watching the upcoming U.S. Consumer Price Index (CPI) report on Wednesday, followed by the Producer Price Index (PPI) and retail sales data on Thursday.
Probabilities for a Fed rate hike stand at 17% for October and 86% for December, according to CME's FedWatch tool. Meanwhile, U.S. consumer sentiment declined further in early October due to rising living costs linked to the Middle East conflict. Other precious metals also saw gains, with spot silver up 0.5%, platinum rising 1%, and palladium climbing 1.2%.