Gold Edges Higher as Weaker Dollar Offsets Trade Optimism, Fed Caution

Gold prices climbed in early Asian trading Monday, supported by a softer U.S. dollar, though gains were limited amid optimism over renewed U.S.-China trade dialogue and investor caution ahead of the Federal Reserve’s upcoming policy decision.

Spot gold rose 0.5% to $3,255.95 per ounce, while June gold futures advanced 0.7% to $3,266.67. The uptick follows a 2% dip last week, as risk sentiment improved globally on easing trade tensions between the world’s two largest economies.

Market sentiment improved after China indicated openness to restarting trade negotiations with the U.S., contingent on mutual respect and the removal of unilateral tariffs. Reports also suggested that the Trump administration had initiated contact with Chinese counterparts, adding to optimism and reducing demand for safe-haven assets like gold.

Still, investor attention remains focused on the Federal Reserve, which begins its policy meeting later this week. The central bank is widely expected to hold interest rates steady, maintaining a cautious approach amid uncertainty over the inflationary impact of ongoing Trump-era tariffs.

Tensions between President Trump and the Fed persist, with the President pressuring the central bank to lower rates. However, higher interest rates typically weigh on gold prices by increasing the opportunity cost of holding non-yielding assets.

The U.S. Dollar Index slipped 0.2%, making gold more attractive to international buyers. Among other precious metals, silver futures rose 0.3% to $32.34 per ounce, while platinum held steady at $966.25.

Copper futures were unchanged at $4.6910 a pound as major markets including China and the UK remained closed for holidays. Investors await China’s upcoming trade data for further insight into global commodity demand.