Gold prices rebounded on Monday, halting a six-session losing streak, as a pause in the dollar’s rally provided some relief to the precious metal.
Investors are also awaiting remarks from Federal Reserve officials this week for further clarity on the interest rate outlook, which has been a key driver of gold’s recent price fluctuations.
Spot gold rose 1% to $2,587.83 per ounce by 0917 GMT, recovering from a two-month low hit on Thursday. Meanwhile, US gold futures climbed 0.9% to $2,592.20. The rebound comes after a significant drop last week, marking gold’s biggest weekly decline in over three years, spurred by expectations of less-aggressive interest rate cuts by the US Federal Reserve and the resultant strength of the dollar.
While the dollar surged 1.6% last week, it has remained relatively flat, holding below the one-year high it reached on Thursday. A softer dollar typically makes gold less expensive for buyers using other currencies, which in turn supports demand for the precious metal. Independent analyst Ross Norman attributed part of the rebound in gold to opportunistic buying, signaling that the market is receiving some support despite ongoing volatility.
“We can look to the dollar for a significant part of the current gold price corrections… I’m not saying you’ve found a solid physical floor yet, but clearly, some opportunistic buying is coming in to support the market as well,” Norman said.
Gold’s price fluctuations are also closely linked to shifting expectations around US interest rates. Recent US economic data has reduced the likelihood of a rate cut by the Fed in December, causing some pressure on gold, which does not yield interest. The Federal Reserve has indicated that it is in no rush to cut rates, with Fed Chair Jerome Powell emphasizing the “notable” performance of the US economy.
This week, at least seven US central bank officials are set to speak, and their comments could offer further insight into the Fed’s stance on interest rates and its approach to managing inflation. For gold investors, this remains a critical factor, as higher rates typically make non-yielding assets like gold less attractive.
Looking beyond short-term market movements, Michael Langford, Chief Investment Officer at Scorpion Minerals, pointed out that President Donald Trump’s policies, if he returns to office, could lead to a stronger US dollar in the short to medium term, which would likely be negative for gold. However, Langford emphasized that Trump’s policies are expected to be inflationary in the long term, which could ultimately benefit gold as a hedge against rising prices.
“President Trump’s inauguration is likely to see an ongoing strengthening of the USD, which is negative for gold in the short to medium term. However, as his stated policies are likely to be significantly inflationary in the long term, this will benefit gold,” Langford said.
Gold was not the only precious metal to see gains on Monday. Silver rose 1.4% to $30.63 per ounce, platinum added 1.4% to $951.59, and palladium climbed 1.8% to $967.62. This broad-based rally in precious metals suggests that investor sentiment may be shifting, with gold and its counterparts benefiting from a pause in the dollar’s upward momentum.
While gold is showing signs of recovery, the outlook remains volatile. Analysts predict that the market could experience more fluctuations as the year draws to a close, driven by profit-taking and position adjustments ahead of the holidays. Nevertheless, with ongoing uncertainty surrounding the US Federal Reserve’s monetary policy and broader economic conditions, gold may continue to find support from opportunistic buying and its role as a safe haven asset.
As investors wait for further signals from the Federal Reserve, the focus will be on whether gold can sustain its recent gains or whether the dollar’s strength will continue to weigh on the precious metal’s price in the weeks ahead.
The Wall Street Journal and Reuters contributed to this report.
