Gold Holds Gains as Dollar Weakens

Gold (XAUUSD) prices started the week firmer, extending gains built over the previous two sessions. Spot gold (XAUUSD) rose about 0.28% to $4,387.95 an ounce in one session, while U.S. gold futures for December delivery added 0.2% to $4,444.40. In later trading, spot bullion steadied near $4,420 an ounce, reflecting a roughly 1.5% advance over the prior two sessions.

The price action kept gold in a tight range in the mid-$4,300s to low-$4,400s, signaling that recent strength was being maintained rather than sharply reversed. The resilience came despite some pressure from tax measures in key consumer markets, with overall demand described as holding up.

A central driver of the latest move in gold was renewed weakness in the U.S. dollar. A widely watched dollar gauge fell to its lowest level since May, while the U.S. dollar index (DXY) slipped to around the psychologically important 100 level. This retreat in the currency made gold cheaper for buyers using other currencies and helped support bullion prices.

Analysts noted that the softer dollar, combined with changing expectations for U.S. monetary policy, has been a significant tailwind for the metal. With currency headwinds easing, gold’s appeal as a store of value and portfolio diversifier has been reinforced for international investors.

Gold’s advance also reflected reduced expectations of additional interest rate increases in the United States. After a run of softer economic data, swaps markets were no longer fully pricing in another Federal Reserve hike before the end of the year. This shift lowered the opportunity cost of holding non-yielding assets such as gold.

Market participants were awaiting the release of minutes from the Fed’s July meeting for further signals on the policy outlook. The combination of subdued inflation readings and softer employment indicators has fed into a view that policymakers may tolerate current inflation levels, a backdrop that has historically been supportive for bullion.

On the demand side, India’s gold market has felt some downtrend pressure linked to taxes, but overall buying interest has remained resilient. Local factors such as a depreciating rupee have kept inflation concerns elevated, sustaining interest in gold as a hedge.

Geopolitical developments, including tensions involving the U.S. and Iran and broader Middle East issues, continued to be tracked by investors as a factor in safe-haven flows. While any potential agreements or easing of tensions could influence sentiment, gold has remained supported as markets weigh these risks alongside the evolving monetary policy landscape.