Gold gains on weaker dollar, reduced Fed rate-hike bets

New York saw gold prices rise on Monday, buoyed by a weaker US dollar and recent weak economic data that slashed expectations of a U.S. interest rate increase next month. The price of spot gold climbed 0.60 percent to $4,400.15 per ounce by 07:10 GMT, reaching a two-month high last week. December U.S. gold futures also climbed 0.40 percent to $4,456.50.

The U.S. dollar index slipped 0.20 percent, making metals priced in greenbacks cheaper for holders of other currencies. Gold has been on an upward trend since the beginning of the week, with soft inflation figures keeping the U.S. dollar under pressure and giving gold ample room to push towards the $4,400 level, according to Tim Waterer, chief market analyst at KCM Trade.

For gold to continue its upward trajectory and break above $4,500, it would require further dollar weakness or a clearer sign of a pullback in energy prices. An unexpected drop in U.S. nonfarm payrolls in July, along with evidence of only mild consumer price inflation, has diminished expectations that the Federal Reserve will raise interest rates in September. Current market expectations have shifted to a 29 percent chance of a September rate hike, down from 47 percent a month earlier, as per CME's FedWatch Tool.

Traders are now focusing on the minutes of the Federal Reserve's July meeting, set for release on Wednesday, for further insights into the Fed's monetary policy. On a geopolitical note, U.S. President Donald Trump's envoys met with Egyptian, Qatari, and Turkish mediators in Cairo on Sunday, seeking to advance his Gaza peace plan, while Israel continued airstrikes in the enclave. Silver rose 1.80 percent to $65.82 per ounce, platinum increased 0.70 percent to $1,759.69, and palladium gained 1.70 percent to $1,334.77.