Gold rose to around $3,260 per ounce on Monday, driven by a weaker U.S. dollar as traders positioned themselves ahead of key geopolitical and economic developments.
Gold rises on softer dollar
The precious metal found support from continued uncertainty surrounding U.S.-China trade negotiations, as market participants awaited further clarity on the future of the trade war between the world's two largest economies. On Sunday, President Donald Trump expressed his belief that China wanted to reach a deal, though he offered no specifics or timeline for any potential agreement. His remarks, while indicating a willingness to negotiate, failed to provide any concrete progress, leaving markets in a holding pattern.
Last week, Beijing responded to the U.S. proposals by indicating that it is currently assessing Washington’s offer to restart trade talks. However, Chinese officials made it clear that meaningful dialogue could not proceed unless the Trump administration first demonstrates its sincerity by removing the unilateral tariffs that have strained relations between the two countries. This ongoing standoff has kept markets on edge, with investors wary of the economic impact of prolonged trade tensions and uncertain trade policy outcomes. As the situation develops, gold continues to be viewed as a safe-haven asset, benefiting from the broader risk aversion that accompanies trade-related uncertainty.
Market shifts attention to Fed meeting
Adding to gold's upward momentum, market attention is now shifting toward the U.S. Federal Reserve’s policy meeting later this week. The central bank is widely expected to keep interest rates unchanged, as recent economic data suggests that while growth is slowing, it has not yet reached the level where aggressive rate cuts would be warranted. However, President Trump's renewed calls for a rate cut to stimulate the economy have added an additional layer of complexity to the situation. While the Fed has maintained a relatively dovish stance in recent months, it is unlikely to make any abrupt policy moves without further signs of economic weakness, such as deteriorating job data or a sharper slowdown in inflation. The central bank’s decision, along with any forward guidance it provides, will be closely scrutinized by traders, as it could have a significant impact on the U.S. dollar and, in turn, on gold prices.
In the broader context, gold’s performance remains tethered to both geopolitical risks and monetary policy expectations. While the U.S. dollar’s recent weakness has provided tailwinds for the metal, its future trajectory will depend on how trade negotiations evolve, whether the Fed shifts its stance, and how global growth dynamics unfold in the coming months.
