Gold Prices Partially Rise Amid Inflation and Dollar Pressure
Gold Rises as Dollar Weakens, but Rate Cut Hopes Limit Gains
Gold prices increased by 0.3% to $4505.86 per ounce on Monday as the U.S. dollar weakened, but gains were limited due to inflation concerns stemming from rising energy prices.
Investor expectations regarding the Federal Reserve's (U.S. central bank) interest rate cuts this year have also declined.
Gold Rises Amid Weakening U.S. Dollar
As of 03:30 GMT, gold in spot transactions saw a slight increase of 0.3% to $4505.86 per ounce, while U.S. futures contracts for April delivery rose by 0.3% to $4535.80.
Analysts attribute this partial rise to the weakening dollar, making commodities priced in U.S. currency more attractive to foreign investors.
Oil Prices Rise Amid Middle East Tensions
Brent crude prices rose to over $115 per barrel following Houthi attacks on Israel, leading to heightened geopolitical tensions and increased inflation concerns.
The oil contract has risen by 60% since early March, marking a record monthly increase.
Nicholas Frabel, Global Head of Institutional Markets at "ABC Refinery," stated:
"Last week's gold price movements were a reaction to oversold conditions, with a potential reversal of the recent downtrend, but this needs to be confirmed by price movements this week."
Weak U.S. Rate Cut Expectations Pressure Gold
Traders see slim chances for U.S. interest rate cuts this year due to rising energy prices and their impact on inflation, limiting the expected scope for monetary easing.
Typically, inflation enhances gold's appeal as a hedge, but rising interest rates pressure demand for the non-yielding precious metal.
Gold Performance in March and Dollar Pressure
Gold fell by more than 14% in March, marking the largest monthly decline since October 2008, amid continued pressure from the U.S. dollar, which has risen by over 2% since the onset of the U.S.-Israeli conflict over Iran on February 28.
Other Precious Metals Affected by Markets
Prices of other precious metals rose as follows:
- Silver: 0.8% to $68.67 per ounce
- Platinum: 2.5% to $1909.45
- Palladium: 3.2% to $1420.63
