Gold prices climbed on Monday, benefiting from a drop in oil prices that eased inflation concerns. Spot gold rose 0.7% to $4,094.43 per ounce, while US gold futures for December delivery also gained 0.7% to $4,103.60. The gains came as investors awaited key US price data this week that could influence the Federal Reserve's rate decisions.
The precious metal had surged about 5% last week following the Democratic victory in the US midterm elections, which raised hopes for a resolution to the Middle East conflict. Oil prices fell on Monday after US President Donald Trump downplayed the likelihood of new strikes on Iran, though tensions in the Strait of Hormuz kept supply worries in focus.
Nikos Tzabouras, an independent financial markets analyst, noted that gold was rising due to lower oil prices, a weaker dollar, and easing bond yields. He added that the Democratic sweep had sparked optimism for a US-Iran resolution and could bring more scrutiny of the AI boom, potentially helping to contain inflation.
The dollar softened, making gold more affordable for overseas buyers. However, gold had fallen 0.3% on Friday after stronger-than-expected US payrolls data reinforced expectations of higher interest rates for longer. Traders currently see an 81% chance of a Fed rate hike in December, up from 73% before the jobs data.
Market focus is now on US consumer price data on Tuesday and producer price figures on Friday, which could shape expectations for the Fed's next move. Tzabouras emphasized that these reports will be pivotal for gold's trajectory, with persistent inflation potentially weighing on bullion prices.