Gold Prices Rise as Fading Rate Hike Expectations Weigh on the US Dollar
Gold prices advanced during Asian trading on Monday as the US dollar weakened, with investors scaling back expectations that the Federal Reserve will raise interest rates again this year.
The precious metal extended last week's rebound after recovering from an eight-month low, while the US dollar slipped toward its weakest level in nearly two weeks.
Spot gold climbed 0.3% to $4,186.80 per ounce as of 01:28 WIB, while gold futures surged 1.8% to $4,199.75 per ounce.
The rally followed weaker-than-expected US Nonfarm Payrolls (NFP) data released on Thursday, which prompted markets to sharply reduce expectations that the Federal Reserve has enough room to tighten monetary policy further this year.
The Federal Reserve continues to balance two key factors when determining interest rates: inflation and labor market conditions. Although the latest employment data signaled a slowdown, persistently elevated US inflation is still expected to keep policymakers on a hawkish path in the coming months.
Higher interest rates typically weigh on gold because they increase the opportunity cost of holding non-yielding assets compared with interest-bearing investments such as US Treasury bonds. This dynamic has pressured gold throughout the year, pulling the precious metal well below its record high reached in January.
Investors are now turning their attention to the Federal Reserve's June meeting minutes, scheduled for release later this week. The report is expected to provide fresh insights into policymakers' outlook on inflation, economic growth, and the future path of interest rates.
Despite last week's recovery, gold's upside remains limited as stubborn inflation continues to support expectations of a prolonged hawkish stance from the Fed.
Meanwhile, declining crude oil prices have eased some inflation concerns. However, markets remain cautious about potential inflationary pressures driven by rapid investment in artificial intelligence infrastructure, while rising global temperatures are also expected to contribute to higher production costs and persistent price pressures.
Silver and Platinum Follow Gold Higher
Other precious metals also posted gains on Monday, tracking gold's positive momentum. Spot silver rose 0.4% to $62.7350 per ounce, while spot platinum gained 1.1% to $1,661.03 per ounce, reflecting improving sentiment across the precious metals market.