The impact of the weakening dollar on gold prices

The weakening of the US dollar and the recent faltering of the US economy have reduced the possibility of the Federal Reserve raising interest rates. This is having a huge impact on the international gold market. The news agency Reuters reported that the price of the precious metal increased on Monday.

According to the report, the price of spot gold in the international market rose by 0.4 percent on Monday. It reached $ 4,391.07 per ounce. Last week, the price of gold rose to its highest level in more than two months.

Meanwhile, the price of US gold futures for December delivery rose by 0.3 percent. It stood at $ 4,448.10 per ounce. At the same time, the US dollar index fell by 0.1 percent. As a result, gold denominated in dollars has become relatively cheaper for holders of other currencies.

Tim Waterer, chief market analyst at KCM Trade, said that soft US inflation data has put pressure on the dollar and allowed gold prices to move towards $ 4,400.

U.S. employment fell more than expected in July. Inflation data was also relatively soft. This has reduced expectations that the Fed will raise interest rates next month.

According to CME FedWatch, the probability of a Fed rate hike in September is now 30 percent, down from 47 percent a month ago. Lower interest rates reduce the opportunity cost of holding non-interest-bearing assets like gold, which makes gold more attractive to investors. The market is now looking ahead to the minutes of the Fed's July meeting, which will be released on Wednesday.

Among other precious metals, spot silver rose 1.4 percent to $65.53, platinum rose 0.3 percent to $1,752.36 and palladium rose 1.6 percent to $1,333.35.