Gold prices climbed on Monday, benefiting from a weaker U.S. dollar and lower oil prices. The rise came as investors prepared for crucial U.S. inflation data later in the week, which could influence the Federal Reserve's next policy move. Spot gold increased by 0.3% to $4,206.01 per ounce, marking its highest level since October 2 earlier in the day. U.S. gold futures for December delivery also rose 0.3% to $4,230.40.
Analysts attributed gold's gains to softer oil prices following a reported energy ceasefire between Russia and Ukraine, announced by U.S. President Donald Trump. The deal, described as 'effective immediately,' led to a drop in oil prices on expectations of more Russian supplies. A more subdued dollar also 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. Markets are now awaiting the U.S. Consumer Price Index (CPI) report on Wednesday, followed by the Producer Price Index (PPI) and retail sales data on Thursday. Traders currently see a 17% chance of a rate hike in October and an 86% probability by December, according to CME's FedWatch tool.
Other precious metals also saw gains, with spot silver rising 0.5% to $61.12 per ounce, platinum up 1% to $1,704.70, and palladium climbing 1.2% to $1,161.81. Meanwhile, U.S. consumer sentiment declined further in early October, as rising living costs due to the Middle East conflict dampened households' economic outlook.