Gold Prices Edge Higher as Weaker US Dollar Offsets Middle East Uncertainty Ahead of Fed Decision
Gold prices climbed on Monday, supported by a weaker US dollar as investors weighed the temporary easing of tensions in the Middle East while awaiting the US Federal Reserve's monetary policy decision later this week.
Spot gold gained 1.1% to $4,096.36 per ounce as of 09:52 WIB (0252 GMT), while August US Gold Futures rose 0.68% to $4,098.60 per ounce.
The precious metal ended last week nearly 1% higher, despite heightened market volatility driven by geopolitical developments and shifting expectations surrounding US monetary policy.
Weaker US Dollar Boosts Gold Demand
Gold received additional support after the US Dollar Index (DXY) fell 0.3%, making dollar-denominated bullion more attractive for investors holding other currencies.
The rally also followed a sharp decline in crude oil prices after military hostilities between the United States and Iran eased over the weekend.
Following 13 consecutive nights of US strikes on Iranian targets, President Donald Trump halted the bombing campaign late Friday to allow diplomatic efforts to continue. Iran also refrained from launching retaliatory attacks against neighboring countries hosting US military bases during the weekend.
Crude oil prices dropped more than 5% in early Monday trading, reversing part of last week's gains that had been fueled by concerns over potential supply disruptions through the Strait of Hormuz and the Red Sea.
Although lower oil prices could help ease inflationary pressures, investors remain cautious as they assess the broader economic outlook ahead of the Federal Reserve meeting.
Federal Reserve Decision in Focus
Market attention is now firmly centered on the Federal Reserve's policy announcement scheduled for Wednesday.
The US central bank is widely expected to leave interest rates unchanged. However, traders will closely monitor comments from Federal Reserve Chair Kevin Warsh for clues on the timing of potential rate cuts and policymakers' assessment of inflation risks and economic growth.
In addition to the Fed meeting, investors will also keep a close eye on upcoming US economic releases, including inflation and labor market data, which could provide further guidance on the central bank's policy path in the coming months.
Precious Metals and Copper Market Update
Among other precious metals, spot silver advanced 2.1% to $59.39 per ounce, while platinum surged 2.3% to $1,630.83 per ounce.
Meanwhile, London Metal Exchange (LME) copper futures edged up 0.4% to $13,693.58 per metric ton, while US copper futures were little changed at $6.36 per pound.