Gold prices climbed 1.1% as a softer dollar and expectations of US rate cuts bolster demand, amid signs of stagflation and a changing Federal Reserve approach.
Gold prices climbed on Tuesday as a weaker dollar and fading expectations of further US interest rate increases lifted demand for the metal, which pays no income and tends to benefit when borrowing costs fall. Spot gold rose 1.1% to $4,425.98 an ounce, while December US gold futures also gained 1.1% to $4,484.10, according to the market update carried by Mangish Net.
Bart Melek, head of commodity strategy at TD Securities, said worries about stagflation , a mix of weak growth and persistent inflation , were helping to support bullion. He pointed to signs of a softer labour market and to the view that the Federal Reserve may become more tolerant of inflation if growth slows further.
The dollar also dropped to its lowest level in more than two months, giving an additional boost to gold and briefly supporting the euro and the yen. Reuters and Al Jazeera have both reported repeatedly this year that gold often moves higher when the dollar weakens, because the metal becomes cheaper for buyers using other currencies. Al Jazeera has also noted that expectations of Fed rate cuts have been a key driver of the latest rally.
The latest move fits a broader pattern seen across 2025, with gold repeatedly reacting to shifts in Fed policy expectations and changes in the dollar’s direction. Market analysts cited by EBC Financial Group and other outlets have said that when investors anticipate lower US rates, the appeal of holding bullion rises, while a stronger dollar can quickly erode demand. For now, traders appear to be betting that the policy backdrop is turning more supportive for precious metals.
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