Gold edges higher on softer dollar as rate-hike expectations ease

Synopsis

In early Asian trading on Monday, gold prices experienced a modest uptick, buoyed by a weaker dollar and fresh economic statistics. Anticipations for a US interest rate hike in the coming month have notably diminished. Markets now reflect a reduced likelihood of a rate increase in September, allowing non-yielding gold to thrive in this low-interest-rate setting.

Gold prices inched higher in early Asian trade on Monday, supported by a softer dollar and recent economic data that curbed expectations of a U.S. interest rate hike next month.

FUNDAMENTALS

Spot gold was up 0.3% at $4,388.62 per ounce, as of 0028 GMT, while U.S. gold futures for December delivery edged ‌0.2% higher ⁠to $4,444.30.

The U.S. dollar index was down 0.1%, making greenback-priced metals more affordable for ​other currency holders.

An unexpected decline in U.S. nonfarm payrolls in July, coupled with data released last week showing only mild consumer price inflation, has reduced expectations that the U.S. Federal Reserve will raise interest rates next month.

Markets are pricing in a ⁠33% chance ‌of a September rate hike, down from 47% ​a month ​ago, CME's FedWatch Tool showed.

Non-yielding gold tends ⁠to perform well in a low-interest-rate environment. Spot gold ​posted a weekly gain on Friday.

The Fed's July ​meeting minutes, due on Wednesday, will be scrutinized for further clues on monetary policy outlook.

On the geopolitical front, U.S. President Donald Trump's envoys met with Egyptian, Qatari and Turkish mediators in Cairo on Sunday, a diplomatic source said, aiming to advance ‌his Gaza peace plan, even as Israel pressed on with airstrikes in the enclave.

Elsewhere, gold discounts in India ​widened last ​week to their highest ⁠levels in more than two months as a rally in bullion prices curbed consumption, while interest in China remained muted despite continued purchases ​by the central bank.

In other metals, spot silver rose 0.8% to $65.19 per ounce. Platinum increased 0.4% to $1,755.40, while palladium added 1.2% to $1,329.00.

DATA/EVENTS (GMT)

0200 China Urban Investment (YTD) YY July

0200 China Retail Sales YY July

0200 China Unemp Rate Urban Area July

0430 Japan Tertiary Ind Act NSA June

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