Gold prices staged a significant recovery on Monday, pushing back above the $5,000 per ounce threshold as the U.S. dollar lost ground. The precious metal's advance comes after a volatile start to the month, with investors shifting attention to critical economic indicators scheduled for release later in the week.
Spot gold traded at $5,018.56 per ounce, marking a 1.2% increase during the morning session. U.S. gold futures for April delivery showed even stronger momentum, rising 1.3% to $5,042.20. The primary catalyst for the rally was a 0.8% decline in the U.S. dollar index, which enhances gold's appeal for holders of other currencies.
Bart Melek, Global Head of Commodity Strategy at TD Securities, identified the dollar's movement as the key driver. Market participants continue to anticipate at least two quarter-point interest rate reductions from the Federal Reserve this year. Gold, which offers no yield, becomes more attractive when borrowing costs are expected to fall or when the dollar weakens.
The rally also reflects sustained institutional demand. The People's Bank of China increased its gold reserves for the fifteenth consecutive month in January, bringing holdings to approximately 74.19 million fine troy ounces. This consistent buying from central banks provides underlying support for the market.
Other metals joined the upward move, with silver jumping 3.4% to $80.58 per ounce. The rebound follows a sharp decline last week that saw gold touch a low near $4,403.
However, risks remain prominent. Stronger-than-expected inflation data or robust employment figures could reverse the trend by boosting Treasury yields and the dollar. Furthermore, after such a pronounced advance, price action may become more sensitive to profit-taking and technical positioning rather than fundamental news.
The immediate focus turns to Friday, February 13, when the Bureau of Labor Statistics will release both the January Consumer Price Index and the January employment report simultaneously at 8:30 a.m. Eastern Time. This dual data release could significantly alter market expectations for monetary policy in a single session.
