Gold prices increased on Monday as financial markets reduced the probability of another Federal Reserve interest rate increase this month following remarks from Chair Kevin Warsh.
US gold futures moved above $4,200 per ounce, while spot bullion also advanced. The gains extended across other precious metals, including silver, platinum and palladium.
Investors were reassessing the outlook for monetary policy after stronger-than-expected US inflation data had previously raised expectations of further tightening.
Analysts at ANZ also maintained their longer-term forecast for gold prices to exceed $5,000 per ounce in 2027, citing investment demand, central-bank reserve diversification and concerns about government debt sustainability.
Gold and Other Precious Metals Advance
At 00:51 ET (04:51 GMT), spot gold was trading 0.4% higher at $4,180.29 per ounce.
US gold futures rose 0.5% to $4,200.92 per ounce.
The increases followed a 0.7% decline in bullion during the previous week.
Silver gained 1.3% to $57.7300 per ounce, while platinum increased by the same percentage to $1,655.53.
Spot palladium rose 1.5% to $1,132.74 per ounce.
The US Dollar Index was little changed, slipping 0.04% to 101.80.
The movements came as traders reconsidered the likelihood of further US interest rate increases and their potential implications for precious metals.
Probability of Fed Rate Increase Falls Below 20%
Market expectations shifted after Federal Reserve Chair Kevin Warsh commented on the monetary policy outlook.
Traders subsequently reduced the implied probability of a 25-basis-point rate increase at the Fed’s next meeting to less than 20%.
His remarks were interpreted as supporting the possibility of keeping borrowing costs unchanged.
The change in expectations followed US inflation figures released the previous week that were higher than economists had anticipated.
Those figures had initially strengthened the case for further monetary tightening and contributed to gains in the dollar.
Warsh’s comments subsequently interrupted the currency’s advance.
Gold prices are sensitive to interest rate expectations because the metal does not provide an income stream. Higher yields on interest-bearing assets can therefore increase the opportunity cost of holding bullion.
Gold Remains Above $4,000 Following Earlier Market Decline
Despite recent volatility, gold has traded above $4,000 per ounce since August.
The metal previously experienced a decline that took prices into bear-market territory following the outbreak of the US-Iran conflict in late February.
According to the supplied market figures, bullion remains approximately one-fifth below its level at the beginning of that conflict.
Demand for assets traditionally used to diversify portfolios during periods of financial and geopolitical uncertainty has helped support prices.
However, elevated sovereign bond yields and a relatively firm US dollar continue to influence investment decisions.
The combination of these factors has contributed to fluctuations in gold prices as investors balance monetary policy expectations against demand for portfolio protection.
ANZ Sees Fiscal Concerns Influencing Gold Demand
Analysts at ANZ highlighted concerns about government borrowing and debt sustainability as factors affecting the longer-term outlook for gold.
The bank indicated that rising sovereign bond yields may increasingly reflect fiscal uncertainty rather than expectations of faster economic growth.
This distinction is relevant to investors assessing whether higher bond yields should reduce demand for bullion or encourage diversification into alternative assets.
ANZ suggested that gold could continue to attract investment as a hedge against risks associated with government debt and financial market conditions.
Nevertheless, the bank acknowledged that high yields and a stronger dollar could contribute to additional selling in the near term.
Its longer-term outlook remains dependent on the persistence of investment demand and broader macroeconomic developments.
Chinese Investment and Central-Bank Purchases Remain Relevant
ANZ also pointed to demand from Chinese investors and central banks as supporting factors for the gold market.
In China, weakness in domestic equity and property markets has contributed to continued interest in bullion as an investment asset.
Central banks have also been diversifying their reserve portfolios, seeking to reduce reliance on individual assets.
These developments provide potential sources of demand beyond short-term trading linked to US interest rate expectations.
The scale and continuity of such purchases will remain important considerations for the market’s longer-term outlook.
ANZ Maintains Forecast for Gold Above $5,000 in 2027
ANZ expects gold prices to encounter constraints on further gains in the near term, particularly if bond yields remain elevated or the dollar strengthens.
However, the bank forecasts a move above $5,000 per ounce during 2027.
Its projection reflects expectations for continued investment demand, central-bank purchases and interest in gold amid concerns about fiscal sustainability.
The forecast remains subject to changes in the Federal Reserve’s policy decisions, currency movements and global financial conditions.
For the immediate market outlook, attention is focused on the Fed’s next meeting after Warsh’s remarks prompted a reduction in expectations for another rate increase.
Monday’s trading left US gold futures above $4,200 per ounce, while spot prices stood at approximately $4,180.
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