Gold prices climbed at the start of the week as traders scaled back expectations for a Federal Reserve interest rate hike this month. The shift came after remarks by Fed Chair Kevin Warsh, which were seen as favoring a pause in rate increases when the central bank meets next week.
Bullion was trading around $4,180 an ounce, recovering from a 0.7% drop the previous week. The probability of a quarter-point rate hike fell to less than one-in-five following Warsh's comments. Higher interest rates typically weigh on gold, as the precious metal does not offer yield.
Traders interpreted Warsh's speech as signaling a more cautious approach to monetary policy, reducing bets on aggressive tightening. The Fed's next meeting is scheduled for later this month, where policymakers will decide whether to adjust rates further.