Spot gold rose 0.9% to $4,417.24 an ounce by 1:34 p.m. EDT (1734 GMT). U.S. gold futures for December delivery settled 0.8% higher at $4,473.70.
Gold appeared to be pricing in a stagflationary environment amid weaker employment and expectations that the Fed would tolerate current inflation levels, said Bart Melek, global head of commodity strategy at TD Securities.
“A big factor here is the US dollar has weakened to a psychologically important 100 level.”
The dollar fell to its lowest level in more than two months, making gold less expensive for buyers using other currencies.
Live Events
Markets reduced bets on a Fed rate increase after weaker-than-expected U.S. payrolls data and subdued consumer inflation figures last week.
Investors are now awaiting the minutes of the Fed’s July meeting, due on Wednesday, for indications of the central bank’s policy outlook.Traders see a 33% chance of a September rate increase, down from 51.2% a month earlier, according to the CME FedWatch Tool.
Gold, which offers no yield, typically benefits from lower interest rates because they reduce the opportunity cost of holding bullion.
On the geopolitical front, a senior Iranian official told Reuters that Tehran would intensify tensions in the Strait of Hormuz and across the region if diplomatic efforts with the United States failed, signalling a shift towards a more offensive approach.
Among other precious metals, spot silver gained 2.1% to $66.01 an ounce. Platinum rose 1.3% to $1,770.3 an ounce, while palladium climbed 1.1% to $1,326.92 an ounce.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)