Gold Prices Rise as Fed Rate Hike Bets Ease

Gold prices extended their strong rally on Monday as weak U.S. employment data reduced expectations for further Federal Reserve interest rate hikes, while investors turned their attention to upcoming U.S. inflation figures.

Spot gold rose 1.1% to $4,389.17 per ounce, while gold futures gained 1.1% to $4,448.55 per ounce. The precious metal had already recorded substantial gains in the previous week, with spot gold climbing 7.5% and futures advancing 7.1%.

Gold’s momentum strengthened after Friday’s U.S. jobs report showed the first monthly decline in nonfarm payrolls since February. May and June employment figures were also revised down by a combined 103,000 jobs, adding signs that the labor market may be losing momentum.

The weaker employment data prompted traders to reduce expectations for a Federal Reserve rate hike in September. Lower interest rate expectations generally support gold prices because bullion does not generate interest. They can also weaken the U.S. dollar, making gold more affordable for international buyers.

Investors are now awaiting July consumer price index data on Wednesday and producer price index figures on Thursday. July retail sales data will follow on Friday. Core inflation readings could prove especially important in determining the Fed’s next policy move.

B2BROKER executive John Murillo said relatively modest core inflation could further weaken the case for tighter monetary policy, potentially keeping gold near $4,400 per ounce. UBS, meanwhile, maintained its $5,000 gold price target, citing expectations for declining real yields, U.S. dollar weakness and continued central bank gold purchases.

However, rising oil prices limited gold’s advance. Crude prices jumped nearly 5% Monday amid renewed uncertainty over negotiations involving Iran and the reopening of the Strait of Hormuz.

Iran has ruled out direct talks with the U.S. for now and reiterated conditions for fully reopening the key oil shipping route, including sanctions relief and compensation for war damage. President Donald Trump responded by saying Washington would also seek compensation from Iran in future negotiations.

With U.S. inflation data and Middle East tensions in focus, gold prices could remain volatile as markets reassess the outlook for Fed monetary policy and global energy supplies.