Gold prices stabilized after achieving their first weekly increase since May, largely propelled by a moderation in expectations concerning further interest rate hikes by the U.S. Federal Reserve. Spot gold saw a slight decline of 0.7% to $4,146.67 per ounce by 09:02 ET (13:02 GMT) on Monday, despite touching a two-week high of $4,202.13 earlier in the session. U.S. gold futures for August delivery, however, gained 0.8% to $4,157.70 an ounce.
This steadiness follows a period where weak U.S. jobs data for June reduced the likelihood of the Fed raising rates to combat inflation. Swap traders now estimate less than a 20% chance of a quarter-point hike at the next Fed meeting, a decrease from 33% earlier in the week. This shift in sentiment helped gold record a 2.2% gain for the past week, with bullion rising towards $4,200 an ounce.
The recovery of the U.S. dollar, ahead of the release of minutes from the Federal Reserve’s June meeting, exerted some downward pressure on gold. A stronger dollar makes gold more expensive for international buyers. The Fed, under new Chair Kevin Warsh, left interest rates unchanged in June but hinted at potential rate hikes before the end of 2026 to counter energy-induced inflation. However, Warsh's stance against providing forward guidance on rates suggests the upcoming minutes may be condensed.
Analysts like Bart Melek from TD Securities noted that lower energy prices and softer job growth suggest easing inflationary pressures, supporting gold's rally. He predicts gold will rally towards resistance at $4,280 an ounce but does not expect it to reach his target of $5,300 until next year due to lingering inflationary concerns. Investors previously scaled back bets on monetary policy tightening, which typically acts as a headwind for non-yielding assets like gold.
Gold prices had peaked in January at $5,500 an ounce but have since fallen to around $4,100 per ounce, similar to November 2025 levels. These prices remain above the $2,000 benchmark first crossed in 2020. The current market dynamics underscore the influence of interest rate expectations, which have largely outweighed gold's traditional safe-haven appeal in recent months.
