Gold prices moved slightly higher on Monday after reaching a seven-week high in the previous session. Investors remained focused on Middle East tensions and upcoming U.S. inflation data for fresh clues about the Federal Reserve’s interest-rate outlook.
Spot gold rose 0.3% to $4,354.51 an ounce, while U.S. gold futures also gained 0.3% to $4,414.40.
Gold Hits Highest Level Since Mid-June
Gold prices reached their highest level since June 17 on Friday after weaker-than-expected U.S. employment data raised concerns about the strength of the labor market.
The latest report showed that the U.S. economy unexpectedly lost jobs in July. Employment gains from previous months were also revised sharply lower.
The weaker labor data caused investors to reduce expectations for a Federal Reserve interest-rate hike in September.
Fed Rate Expectations Shift Lower
Futures markets now place the probability of a rate hike at the Fed’s September 15-16 meeting below 50%.
That marks a significant shift from earlier expectations, when markets saw a greater-than-even chance of an increase.
Lower interest rates are generally supportive for gold because bullion does not pay interest. As borrowing costs fall, the opportunity cost of holding gold becomes less significant.
U.S. Inflation Data Takes Center Stage
Investors are now turning their attention to key U.S. inflation reports due later this week.
Consumer Price Index data will be released on Wednesday, followed by producer price figures on Thursday.
Softer inflation readings could strengthen expectations that the Federal Reserve will maintain a less restrictive policy stance.
In contrast, stronger inflation could reduce the likelihood of monetary easing and limit further upside for gold.
Iran and Hormuz Risks Support Safe-Haven Demand
Geopolitical uncertainty is also keeping gold in focus.
Iran said it was close to finalizing an agreement with Oman to establish new shipping routes through the Strait of Hormuz.
However, Tehran said several conditions involving the United States still need to be met before the strategic waterway can fully reopen.
The uncertainty surrounding the Strait of Hormuz continues to support demand for safe-haven assets such as gold.
Higher Oil Prices Complicate the Outlook
While geopolitical tensions can support gold, rising oil prices create a more complicated backdrop.
Higher energy costs can increase inflationary pressure, which may make it harder for the Federal Reserve to adopt a more accommodative policy stance.
That creates a mixed environment for bullion, as safe-haven demand provides support while stronger inflation could keep interest rates higher for longer.
Silver and Platinum Also Gain
Other precious metals also moved higher.
Silver prices climbed 1.3% to $64.36 an ounce, while platinum gained 0.5% to $1,757.64.
The broader strength across precious metals reflected improved risk positioning and continued investor interest in hard assets.
Copper Prices Extend Their Rally
Copper prices also advanced on Monday.
Benchmark copper futures on the London Metal Exchange rose 0.6% to $14,126.33 a ton, while U.S. copper futures gained 0.7% to $6.635 a pound.
ING analysts noted that copper has rallied sharply on expectations of possible U.S. import tariffs.
Traders have moved large quantities of metal into the United States in anticipation of policy changes, tightening physical supply and supporting prices.
However, with copper trading near record highs, any disappointment over future tariff policy could put some of that premium under pressure.
Gold Traders Await the Next Catalyst
Gold remains supported by weaker U.S. labor data, lower expectations for Fed tightening and continued geopolitical uncertainty.
However, the next major move could depend heavily on this week’s inflation figures.
If inflation continues to cool, gold could receive further support from lower rate expectations. On the other hand, stronger price pressures could limit gains by reducing expectations for easier Federal Reserve policy.
