Gold Rises as Expectations Grow for Fed to Hold Steady

Gold prices rose on Monday (17th), primarily due to a weaker U.S. dollar and diminishing expectations of a Federal Reserve (Fed) rate hike, while investors continued to monitor developments in Middle East geopolitical tensions.

Spot gold climbed 0.9%, reaching $4,417.24 per ounce.

December-delivery gold futures rose 0.8% to settle at $4,473.70 per ounce.

Bart Melek, Global Head of Commodity Strategy at TD Securities, said the gold market appears to be reflecting a stagflationary environment, as the labor market weakens and the market anticipates the Fed will tolerate current inflation levels.

"One key factor is that the dollar has weakened below the psychological 100 level," he said.

The U.S. dollar fell to its lowest level in over two months, lowering the cost of gold for buyers holding other currencies.

With the U.S. non-farm payrolls report weaker than expected and the Consumer Price Index (CPI) showing moderate inflation, markets have scaled back bets on a Fed rate hike. Investors are now awaiting the release of the Fed's July meeting minutes on Wednesday for clues on future monetary policy direction.

The CME FedWatch Tool shows traders currently pricing in a 33% chance of a Fed rate hike in September, down from 51.2% a month ago.

Gold does not yield interest, so lower interest rates typically benefit gold prices by reducing the opportunity cost of holding the metal.

On the geopolitical front, a senior Iranian official said Tehran would escalate tensions in the Strait of Hormuz and across the Middle East if diplomatic efforts with the U.S. fail, signaling a potentially more aggressive stance from Iran.

Other Precious Metals Trading

Spot silver rose 2.1% to $66.01 per ounce.

Spot platinum gained 1.3% to $1,770.30 per ounce.

Spot palladium climbed 1.1% to $1,326.92 per ounce.