Weaker Dollar and Rate Hike Bets Lift Gold Demand to New Heights

Gold prices surged on Monday as a weaker US dollar and diminished expectations of a US Federal Reserve rate hike propelled bullion demand. Spot gold rose 0.9% to $4,417.24 an ounce by 1:34 p.m. EDT (1734 GMT), while U.S. gold futures for December delivery settled 0.8% higher at $4,473.70.

According to Bart Melek, global head of commodity strategy at TD Securities, 'A big factor here is the US dollar has weakened to a psychologically important 100 level.' The dollar fell to its lowest level in more than two months, making gold less expensive for buyers using other currencies.

The reduced bets on a Fed rate increase followed weaker-than-expected U.S. payrolls data and subdued consumer inflation figures last week. Investors now await the minutes of the Fed’s July meeting, due on Wednesday, for indications of the central bank’s policy outlook.