Gold remained firmly supported near $4,400 an ounce on Monday as investors balanced softer U.S. economic data and a weaker dollar against persistent inflation risks stemming from disruption to Middle East energy supplies.
At 01:04 ET (05:04 GMT), XAU/USD was 0.5% higher at $4,399.44 an ounce. Gold Futures rose 0.4% to $4,455.90, while other precious metals recorded stronger gains. XAG/USD climbed 1.7% to $65.83 and XPT/USD advanced 1.8% to $1,749.15 an ounce.
Meanwhile, the US Dollar Index declined 0.2% to 99.49, providing a more favourable backdrop for dollar-denominated bullion.
Cooling U.S. economy changes the rate outlook
Bullion entered Monday’s session with momentum after gaining almost 1% over the previous week, as signs of weaker U.S. economic activity reduced concerns that the Federal Reserve could raise interest rates in the near term.
Consumer sentiment declined for the first time in three months, while retail sales suffered their largest monthly drop in more than a year.
Those figures have given policymakers less reason to tighten monetary conditions immediately. Lower expectations for interest rates can benefit gold because the metal offers no yield and faces greater competition from interest-bearing assets when borrowing costs rise.
ANZ analysts said the negative correlation between bullion and U.S. Treasury yields has also become more pronounced, leaving gold increasingly sensitive to movements in borrowing costs.
The brokerage sees three potential stages for the gold market over the next year. Initially, persistent inflation and a Federal Reserve remaining on hold could constrain prices. An energy-driven economic slowdown could then change the macroeconomic environment before eventual monetary easing provides a stronger catalyst for bullion.
ANZ expects geopolitical deterioration to continue encouraging central banks to diversify their reserves and forecasts gold could reach $5,200 an ounce by year-end.
The next important monetary-policy signal is due on Wednesday with the release of minutes from the Federal Reserve’s July meeting.
Middle East energy uncertainty complicates the inflation picture
While recent U.S. indicators have softened, geopolitical developments mean inflation concerns have not disappeared.
Several ships were attacked in the Strait of Hormuz late last week, and the U.S. said it was preparing additional measures designed to increase pressure on Iran’s economy.
Vessels have continued to leave the waterway despite the security risks, with some reportedly turning off satellite transponders in an effort to make themselves more difficult to detect.
At the diplomatic level, Iran and Oman appear to be moving closer to an arrangement governing the management of the Strait of Hormuz. The United States, however, is not involved in those negotiations.
The uncertain combination of security incidents and diplomatic efforts leaves the outlook for global energy flows highly volatile.
Another substantial rise in oil prices could revive inflationary pressure, potentially limiting the Federal Reserve’s room to ease monetary policy even if economic growth continues to weaken.
China and other central banks underpin bullion demand
Beyond monetary policy and geopolitical uncertainty, structural demand from central banks continues to provide an important source of support for gold.
Bullion’s recovery above $4,000 an ounce has coincided with stronger investor interest and sustained official-sector purchases, with China remaining a notable buyer.
Gold moved above its 100-day moving average last week for the first time since April and has remained close to the technical benchmark.
ANZ said global central banks accumulated 244 tonnes of gold during the first quarter of 2026, representing the strongest quarterly purchasing total since the final three months of 2024.
China added 8 tonnes to its holdings in April alone, marking its largest monthly gold purchase since December 2024.
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