Gold Prices Strengthen Again on Monday, Driven by Weaker US Dollar and Fed Rate-Cut Expectations

Gold prices recorded further gains in Monday’s trading, supported by a weaker US dollar and rising expectations of interest rate cuts by the Federal Reserve (the Fed). The combination of these two factors created positive sentiment that lifted the precious metal and attracted global investor interest.

Citing Reuters, spot gold prices rose about 1.2% to USD 3,486.86 per ounce — the highest level in more than four months. This increase was triggered by dovish remarks from San Francisco Fed President Mary Daly, which reinforced expectations that the Fed would cut interest rates. In addition, a US court decision overturning most Trump-era tariffs further weakened the dollar, providing additional support for gold prices. Meanwhile, gold futures also jumped to USD 3,554.60 per ounce.

Gold and silver both reached all-time highs on the Multi Commodity Exchange (MCX) with gains of more than 1%. The weaker US dollar was seen as a key factor behind the strength of these safe-haven assets, supported by strong demand amid ongoing global economic uncertainty.

Why Do Gold and the US Dollar Move in Opposite Directions?

1. Gold Becomes More Attractive When the Dollar Weakens
   Because gold is traded in US dollar denominations, a weaker dollar makes gold more affordable for investors using other currencies. This increased demand pushes prices higher.
    
2. Fed Rate-Cut Expectations
   Dovish statements from Fed officials raise market hopes for interest rate cuts, reducing the appeal of interest-bearing assets and prompting investors to shift funds into gold, a non-yielding asset.
    
3. Safe-Haven Sentiment Amid Global Uncertainty
   During periods of economic and geopolitical instability, gold is often chosen as a hedge asset, boosting demand and strengthening prices.