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Gold prices rise on the weaker dollar and reduced Fed rate hike bets

Gold prices rose on Monday due to a weakened dollar and recent softer economic data, which reduced expectations of a U.S. rate hike in the next month. Gold spot rose 0.4% at $4,391.49 an ounce as of 0520 GMT. Last week, prices reached a record high. U.S. Gold Futures for December Delivery edged up 0.3% to $4,448.40. The U.S. dollar index fell by 0.2%, making metals priced in greenbacks more affordable to other currency holders.

Tim Waterer is the chief market analyst for KCM Trade. He said, "Gold has taken the ball and run away with it this week. Soft inflation numbers are keeping the U.S. Dollar under pressure, and giving gold more headroom to move towards the $4400 level."

"A sustained movement?above 4,500 would probably need additional dollar 'weakness or an even clearer drop in energy prices." The unexpected drop in nonfarm payrolls for the U.S. in July combined with data that showed only mild inflation in consumer prices has led to a reduction in expectations of a rate hike by the U.S. Federal Reserve next month.

CME's FedWatch Tool shows that traders now price in a 30% chance for a rate hike in September, down from a 47% probability a month ago.

Lower interest rates lower the opportunity cost of holding bullion that does not yield, increasing its appeal to investors.

The markets are now awaiting the minutes of the Fed meeting for July, which is due on Wednesday. These will provide further insight into policymakers' monetary policies. A diplomatic source revealed that on a geopolitical level, U.S. president Donald Trump's envoys had met with Egyptian, Qatari, and Turkish mediators on Sunday in Cairo, to discuss advancing?his Gaza Peace Plan, while?Israel continued airstrikes?in the enclave. Silver spot rose 1.4% per ounce to $65.57. Palladium rose 1.4%, while platinum fell 0.1%, to $1,746.43. Platinum dropped by 0.1%, to $1,746.43. (Reporting and editing by Rashma Aich in Bengalur; Ashitha Shivaprasad and Sukanya Mittra from Bengalur)

(source: Reuters)