Gold Edges Higher as Softer Dollar and Expected Fed Rate Cut Boost Market Confidence

BY COMFORT OGBONNA

Gold prices inched higher on Monday, lifted by a weakening U.S. dollar and growing conviction among traders that the Federal Reserve will deliver an interest rate cut at this week’s policy meeting. The shift in expectations has helped reinforce bullish sentiment across precious metals as investors position themselves ahead of what could be a pivotal moment for financial markets.

Spot gold climbed 0.3% to $4,207.99 per ounce as of 0530 GMT, extending its steady upward trend. U.S. gold futures for December slipped slightly by 0.1% to $4,237.00 per ounce, but overall market momentum remained firmly optimistic. With the dollar drifting near its lowest level in a month, gold became more attractive for buyers using other currencies, further supporting prices.

Analysts say the broader economic backdrop is adding to gold’s resilience. Tim Waterer, Chief Market Analyst at KCM Trade, noted that recent core PCE data — a key inflation gauge — passed without disrupting market expectations. Investors remain confident that the Fed is preparing for a rate cut, a shift that typically strengthens demand for gold by reducing the opportunity cost of holding non-yielding assets. According to Waterer, the combination of a restrained dollar and expected looser monetary conditions is giving gold room to push higher.

Economic signals from the United States also point to moderating momentum. Consumer spending slowed in September following three consecutive months of strong gains, hinting at potential cooling toward the end of the third quarter as households grappled with rising living costs and a sluggish labour market. Private payroll data reinforced that trend, revealing the sharpest decline in job growth in more than two-and-a-half years.

Comments from several Federal Reserve officials in recent weeks have also reinforced expectations of a more accommodative policy stance. The CME FedWatch tool shows markets pricing in an 88% probability of a 25-basis-point rate cut at this week’s meeting, a factor that continues to underpin sentiment in the precious metals market.

Silver dipped 0.4% to $58.05 per ounce after reaching a new record of $59.32 on Friday. Despite the small pullback, silver has surged more than 100% so far in 2025, driven by strong industrial demand and increasing speculation that supply shortages could extend into 2026. Waterer noted that silver remains undervalued relative to gold, and many investors are taking advantage of this gap as the metal’s long-term outlook strengthens.

Platinum also rose, gaining 1.4% to reach $1,664.20 per ounce, while palladium climbed 0.8% to $1,468.26, signalling broad-based strength across the precious metals sector as markets brace for the Fed’s upcoming decision.