Gold futures have seen a marginal decline on Monday, but are on track to achieve their best month since March. This impressive performance can be largely attributed to the weakening of the U.S. dollar, which has propelled gold prices up by over 2%.
Price Action
- Gold futures expiring in December (GC00, -0.18% GCZ23, -0.18%) have dropped by $1.60, or 0.1%, to $1,998 per ounce on Comex.
- September silver (SI00, +0.12% SIU23, +0.12%) has gained 4 cents, or 0.2%, reaching $24.54 per ounce.
- Palladium futures for September delivery (PAU23, +1.00%) have seen an increase of $9.90, or 0.8%, reaching $1,249 per ounce.
- October platinum (PLV23, +0.07%) has recorded a gain of 40 cents, reaching $944 per ounce.
- Copper for September delivery (HGU23, +0.98%) has gained 1 cent, or 0.3%, reaching $3.94 per pound.
Market Drivers
Gold has closed out the month of July with a substantial monthly gain, marking its first positive performance since April. According to Dow Jones Market Data, this achievement can be attributed to the weakening U.S. dollar.
Many traders predict that decreasing inflation in the U.S. will deter the Federal Reserve from raising interest rates further. This expectation has driven up gold prices as investors anticipate that other central banks, such as the European Central Bank, may also be concluding their rate hike cycles.
Rupert Rowling, a market analyst at Kinesis Money, explains that "Gold's buoyancy is based on the expectation that central banks around the world are coming to the end of their cycle of interest rate increases."
The ICE U.S. Dollar Index (DXY, +0.12%), which measures the strength of the dollar against a basket of its rivals, has seen an 0.8% decrease in July. However, it has slightly risen by 0.1% to 101.69 on Monday.
A weaker dollar typically results in higher gold prices since gold is priced in dollars in global markets. Therefore, a weaker dollar makes gold more affordable for buyers using other currencies.
