Gold held above the psychological $5,000 level at the start of the week, supported by a combination of factors that are "right" for the precious metal : physical demand from China, expectations of lower US interest rates, and a weakening dollar.
The main trigger came from weekend data showing the People's Bank of China (PBOC) again adding to its gold reserves. This means China has recorded gold purchases for the 15th consecutive month, indicating that demand remains strong amid fiscal concerns and global economic shutdowns.
From the US side, the market is also increasingly betting that the Fed could be more dovish in 2026. Recent US employment data has signaled easing, which opens the door to further interest rate cuts, which is usually "fuel" for gold since gold offers no yield.
The story heated up after rumors emerged about political pressure on the central bank. US President Donald Trump's remarks on interest rates, coupled with comments from government officials about possible legal action against Fed chair candidates, have further raised concerns about the central bank's independence, a situation that often prompts investors to seek safe haven assets.
Meanwhile, the US dollar weakened moderately for two consecutive days, coupled with the ongoing dedollarization narrative. This combination makes gold more attractive, because when the USD falls, gold prices become relatively cheaper for buyers outside the US.
However, gold's upward momentum has not been completely unhinged. Signs of easing Middle East tensions after indirect US - Iran talks concluded with an agreement to maintain diplomatic channels have improved risk sentiment. As a result, some funds have flowed into riskier assets, preventing gold's safe haven surge.
The market is now holding off on major moves as it awaits crucial US data : the delayed NFP on Wednesday and consumer inflation on Friday. These two releases have the potential to determine whether gold will continue to strengthen as the chances of an interest rate cut increase, or if the data forces the market to adjust its expectations for the Fed. (asd)[sma]
Source : Newsmaker.id
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