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Gold Prices Rise as Weak Dollar, Fed Rate Decision in Focus

Gold Prices Rise as Weak Dollar, Fed Rate Decision in Focus. Source: Photo by Michael Steinberg

Gold prices climbed in Asian trading on Monday as a weaker U.S. dollar boosted demand for the precious metal, while investors assessed easing geopolitical tensions in the Middle East and looked ahead to the Federal Reserve's closely watched policy meeting later this week.

Spot gold advanced 1% to $4,094.50 per ounce, while August U.S. gold futures gained 0.6% to $4,096.60. The precious metal also ended last week nearly 1% higher despite volatile trading, reflecting continued investor demand for safe-haven assets.

A 0.3% decline in the U.S. Dollar Index helped support gold by making dollar-denominated bullion more affordable for overseas buyers. The weaker greenback came as markets reacted to improving geopolitical conditions after the United States and Iran paused military operations over the weekend.

President Donald Trump halted U.S. airstrikes on Iranian targets late Friday following nearly two weeks of military action, allowing room for diplomatic negotiations. Iran also refrained from launching retaliatory attacks against neighboring countries hosting U.S. military bases, easing fears of a broader regional conflict.

The de-escalation triggered a sharp drop in oil prices, with crude falling more than 5% in early Monday trading after last week's rally fueled by concerns over potential supply disruptions through the Strait of Hormuz and the Red Sea. Lower energy prices could help ease inflation pressures, though investors remain cautious ahead of key central bank decisions.

Attention is now centered on the Federal Reserve's policy announcement scheduled for Wednesday. Markets broadly expect the Fed to keep interest rates unchanged, but investors will closely monitor comments from Chair Kevin Warsh for signals on the timing of future rate cuts and the central bank's outlook on inflation and economic growth.

Traders are also awaiting upcoming U.S. inflation and labor market data, which could provide further guidance on the Fed's monetary policy path in the coming months.

Elsewhere in the precious metals market, silver rose 2% to $59.37 per ounce, while platinum gained 1.6% to $1,618.83, reflecting broad strength across the sector as investors positioned ahead of the Fed meeting.

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