Gold prices climbed on Monday as investors scaled back expectations for another Federal Reserve interest rate hike in October following comments from Fed Chair Kevin Warsh. Growing confidence that the central bank will leave borrowing costs unchanged helped support precious metals despite persistent inflation concerns.
Spot gold rose 0.2% to $4,173.59 per ounce at 20:48 ET (00:48 GMT), while U.S. gold futures increased 0.3% to $4,194.05.
Other precious metals also recorded gains. Silver prices advanced 0.6% to $57.3070 per ounce, platinum climbed 0.4% to $1,641.66, and palladium gained 0.8% to $1,125.05. Meanwhile, the U.S. Dollar Index remained largely unchanged at 101.82.
The rebound followed a 0.7% weekly decline in gold prices. Traders reduced the probability of a 25-basis-point Federal Reserve rate increase to below 20% after interpreting Warsh's remarks as signaling a potential pause at next week's policy meeting.
Stronger-than-expected U.S. inflation data had previously strengthened expectations for additional monetary tightening, pushing the dollar higher and weighing on bullion.
However, reduced rate hike expectations have improved gold's appeal. Higher interest rates typically pressure the precious metal because it offers no yield, making interest-bearing assets more attractive.
Despite recent volatility, gold has maintained support above $4,000 per ounce since August. Safe-haven demand has helped stabilize prices following a sharp decline triggered by the U.S.-Iran conflict in February. Bullion remains approximately 20% below its level when the conflict began.
ANZ analysts believe growing concerns about government debt and fiscal sustainability could strengthen gold's long-term investment appeal. Elevated bond yields increasingly reflect financial risks rather than stronger economic growth, encouraging investors to consider gold as a hedge.
Demand from China also remains supportive as investors seek alternatives to struggling property and equity markets. Meanwhile, central banks continue diversifying their foreign exchange reserves, providing another source of demand.
ANZ expects gold prices to face limited upside in the near term due to elevated yields and dollar strength. However, the bank forecasts bullion could exceed $5,000 per ounce in 2027, supported by sustained investment demand and central bank purchases.
