Gold climbed to $4,120 an ounce on Monday, its highest level since October 21, as easing oil prices helped temper inflation concerns and investors looked ahead to this week’s US CPI and PPI releases for further signals on the Federal Reserve’s policy trajectory.
The advance extended a 5% rally from last week, driven by the Democrats’ victory in securing control of both chambers of Congress in the US midterm elections, which bolstered expectations of a possible resolution to the US-Israeli conflict with Iran.
Crude prices fell sharply on Monday after US President Donald Trump played down the prospect of additional strikes against Iran, contributing to the improved inflation outlook.
Gold’s strength came despite a stronger-than-expected US employment report on Friday, which reinforced expectations that interest rates will remain higher for longer, underpinning both the US dollar and Treasury yields. Futures markets now assign an 81% probability to a Fed rate hike in December, according to the CME FedWatch tool.
Separately, China’s central bank purchased 25.8 metric tons of gold in October, its largest monthly acquisition in three years, according to data from the World Gold Council.
