Gold Stabilizes Near $4,160 as Fed Rate Hike Expectations Cool; Oil Prices Slide
Gold stabilized after securing its first weekly gain since May, supported by receding expectations that the US Federal Reserve will raise interest rates.
The precious metal traded near $4,160 per ounce, following a rally of over 2% last week. Weak US jobs data and falling energy prices prompted traders to scale back their bets on monetary policy tightening. Meanwhile, oil prices slid on Monday as tanker traffic increased through the Strait of Hormuz and OPEC+ signaled a boost in supply.
"Gains remained capped as inflation persists above the Federal Reserve’s target, keeping policymakers cautious about easing financial conditions," said Manav Modi, a commodity analyst at Motilal Oswal Financial Services. He added, "While lower oil prices have alleviated concerns over energy-driven inflation, markets continue to monitor broader price pressures stemming from AI-related investment demand and weather-related supply disruptions."
Oil Eases Inflationary Pressure on Gold
Crude prices, which were a primary driver of inflation at the start of the US-Iran conflict, recorded their biggest quarterly drop since 2020. This followed an increase in energy flows through the strait after a temporary peace agreement between the US and Iran.
This shift eased some inflationary pressures that had weighed on non-yielding gold, which typically performs better when borrowing costs are lower. Concurrently, the Bloomberg Dollar Index moved toward its first gain in three days on Monday.
Trump Allies Push to Reshape the Federal Reserve
Meanwhile, US President Donald Trump and his allies renewed their push to reshape the Federal Reserve, after the Supreme Court blocked an attempt last week to dismiss Governor Lisa Cook. Senior officials and outside allies are actively exploring methods to remove members from the central bank’s Board of Governors in Washington, clearing the path for more appointments by the President himself, according to people familiar with the matter.
Repeated challenges to the Federal Reserve’s independence by the Trump administration helped fuel a powerful rally for gold during the final months of 2025 as part of the so-called "debasement trade"—a bet on inflation and swelling debt burdens in advanced economies.
Market Standings
- Spot Gold: Ticked down 0.3% to $4,166.47 per ounce by 11:35 AM in Singapore.
- Silver: Shed 0.7% to trade at $61.98 per ounce.
- Platinum & Palladium: Remained largely unchanged.
- Bloomberg Dollar Spot Index: Edged higher after losing 0.3% last week.