Gold prices staged a significant rally on Monday, climbing more than 2% to trade above $5,000 per ounce. The move was primarily driven by a decline in the U.S. dollar, which bolstered demand for the non-yielding precious metal.
Spot gold advanced 2.1% to $5,063.88 an ounce, while the actively traded April futures contract on the CME Group's Globex platform rose 2.43% to $5,100.70. Trading volume was notable, with the April contract seeing nearly 94,711 contracts traded ahead of the U.S. midday.
Data-Dependent Rally
The rally comes ahead of a critical week for U.S. economic data, with delayed reports on nonfarm payrolls and consumer prices scheduled for release. Market participants are closely watching these figures, as softer labor and inflation data could reinforce expectations for Federal Reserve interest rate cuts in 2026, potentially providing further support for gold.
Analysts note that gold, which offers no yield, tends to perform well when interest rate expectations decline and the dollar weakens. "The primary catalyst was the U.S. dollar," noted one strategist, adding that geopolitical concerns continue to underpin a "debasement trade" favoring hard assets.
Central Bank Demand Continues
Supporting the market, the People's Bank of China reported it increased its gold reserves for a fifteenth consecutive month in January. The central bank's holdings now stand at 74.19 million fine troy ounces, according to data sourced by Reuters.
The precious metal has experienced notable volatility this year, reaching a record high near $5,600 in January before a sharp correction sent prices down to $4,403.24 in early February.
Other metals joined the advance, with silver and platinum group metals also moving higher, buoyed by the weaker dollar and broader interest in tangible assets.
The sustainability of the rally hinges on incoming economic data. Stronger-than-expected jobs or inflation figures could reverse the dollar's weakness and lift bond yields, making interest-bearing assets more attractive relative to gold. The next major test for the market will be the January Consumer Price Index report, scheduled for release on Friday.
