Gold advances as US dollar pushes lower on easing Fed hike bets

[SINGAPORE] Gold extended a two-week advance as easing expectations for further US Federal Reserve rate hikes put downward pressure on the US dollar, making bullion cheaper for most buyers.

The precious metal rose as much as 1.1 per cent to trade around US$4,425 an ounce, after ending the previous week almost 1 per cent higher.

A gauge of the US dollar was its lowest since May, making bullion that is priced in the currency cheaper for many buyers.

Swaps are no longer fully pricing in another US interest rate increase before the end of 2026, as they were just a week ago. 

“Markets don’t believe the Fed is truly hawkish in the near term,” said Justin Lin, an analyst at Global X ETFs. 

Still, the risk of monetary tightening remains as fresh Middle East violence stoked concerns about an escalation of the war and elevated energy prices.

The prospects for peace in the Middle East suffered a fresh setback, with US President Donald Trump reportedly saying he is in no hurry to end the war with Iran and fighting flaring anew in Lebanon.

In a phone interview with Fox News, Trump said a US naval blockade on Iranian ports is putting pressure on the country and that he has no timeline for resolving the conflict. 

Renewed investor demand and stepped-up central bank buying, notably from China, have helped gold reclaim the key US$4,000-an-ounce threshold.

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Last week’s advance also lifted bullion above its 100-day moving average for the first time since April, with prices continuing to hover around that level.

Bullion “will require a meaningful break above US$4,400 to confirm that its positive momentum has further room to run”, said Global X ETFs’ Lin.

“The recent bounce, while mostly driven by technicals, has also priced in most of the positive catalysts from the past week, so we may see gold trade relatively flat” until the next clear catalyst, he added. 

The minutes of the Fed’s July policy meeting due for release on Wednesday are set to provide some clarity on rate considerations. 

Spot gold was 1 per cent higher at US$4,426.76 an ounce as of 12.10 pm in New York.

Silver rose 2.5 per cent to US$66.33 an ounce, after gaining almost 2 per cent last week.

Platinum and palladium advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was down 0.1 per cent. BLOOMBERG