Gold prices gained on Monday, supported by a softer US dollar and ongoing geopolitical concerns, as investors awaited the Federal Reserve’s upcoming policy meeting. Market participants are anticipating a third rate cut and potential guidance on the economic outlook for 2025.
As of 1:41 p.m. ET (1841 GMT), spot gold was up 0.2% at $2,654.27 per ounce, while U.S. gold futures settled 0.2% lower at $2,670. Analysts pointed to several factors influencing the precious metal’s price, including China’s renewed gold buying activity. Shah, a market expert, highlighted that China, the world’s largest consumer of gold, is expected to increase policy stimulus to support its economy, further bolstering demand for the metal.
Geopolitical tensions also played a role in gold’s rise. Over the weekend, Israel announced plans to double its population in the Golan Heights, citing threats from Syria. This move comes amid ongoing instability in the region, which has heightened demand for gold as a safe-haven investment.
Gold is traditionally seen as a stable asset during periods of economic and geopolitical uncertainty. Additionally, with interest rates remaining low, non-yielding assets like gold become more attractive to investors.
The Federal Reserve’s two-day meeting, beginning Tuesday, is expected to result in a quarter-point rate cut, with the central bank offering new projections for 2025 and beyond. Market analysts, however, caution that while the broader economic and political environment is supportive of gold, the Fed‘s outlook could limit further price gains if it signals a prolonged pause in rate cuts after December.
The US dollar index (.DXY) fell by 0.1%, retreating from a near three-week high reached on Friday, making gold priced in dollars more affordable for investors holding other currencies.
Looking ahead, Citi analysts forecast strong demand for both gold and silver until US interest rates stabilize, with peak demand for the metals expected between late 2025 and early 2026. Key economic data releases this week, including US GDP and inflation figures, are also likely to influence market sentiment.
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