Gold Surges to Two-Month High as Rate Hike Bets Fading

Gold prices rose Monday, buoyed by a weaker US dollar and softer economic data that reduced expectations for a Federal Reserve interest rate hike next month. Spot gold hit $4,391.49 per ounce, a more-than-two-month high.

The US dollar index fell 0.2%, making greenback-priced metals more affordable for holders of other currencies. Analyst Tim Waterer noted that soft inflation numbers have kept the dollar under pressure, giving gold 'extra headroom to push towards the $4,400 level.'

Markets are now pricing in a 30% chance of a September rate hike, down from 47% last month, according to CME's FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding bullion, enhancing its appeal to investors.