Gold prices rose sharply on Monday, driven by expectations that the Federal Reserve may keep interest rates steady amid weaker US jobs data and increased buying by the SPDR Gold Trust, signalling renewed investor confidence in the metal’s momentum.
Gold prices climbed sharply on Monday as traders continued to bet that the Federal Reserve may leave interest rates unchanged at its September meeting, while a hefty purchase by the SPDR Gold Trust added to the metal’s momentum. Spot gold in the US closed at $4,418 an ounce, up nearly $40, or 0.9%, from the previous week’s finish, according to Kitco data. Silver also advanced, while December 2026 gold futures on COMEX ended higher at $4,473.70 an ounce.
The move was driven in part by a shift in expectations for the Fed after a weaker-than-expected US jobs report for July and inflation data that matched forecasts. CME’s FedWatch Tool showed traders pricing only a 33% chance of a quarter-point rate increase next month, down from more than 50% a month earlier, with a 67% probability assigned to rates staying on hold. That matters for gold because the metal does not pay interest, making it more attractive when borrowing costs and bond yields ease.
Bart Melek, chief commodity strategist at TD Securities, said the market appears to be pricing in a stagflationary US backdrop, with slower growth and elevated inflation. He added that investors seem to believe the labour market is softening and that the Fed may tolerate current inflation rather than risk worsening employment conditions. A weaker dollar has also helped, with the dollar index slipping below the psychologically important 100 level and falling to its lowest point in more than two months.
The biggest gold-backed exchange-traded fund, SPDR Gold Trust, bought 7.2 tonnes on the day, its strongest net purchase in several months, lifting holdings to 1,030.7 tonnes. Over the previous two weeks, the fund had already added nearly 17 tonnes. The buying came even as crude oil rose, which can weigh on precious metals by stoking inflation worries and pushing up the prospect of higher rates for longer.
Oil’s advance was tied to renewed tension between the US and Iran after a temporary agreement expired, according to Reuters. Brent crude rose 2.7% to close near $91 a barrel, after gaining 5% last week. US Treasury yields also moved higher, with the 30-year yield climbing to 5.311%, its highest since June 2007, while the 10-year and two-year yields also edged up. In Asia on Tuesday morning, gold and silver extended their gains, with spot gold trading above $4,425 an ounce.
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