Gold price increases due to weakening dollar, investors await US data

The price of gold rose on Monday, driven by the weakness of the US dollar, as investors awaited the Federal Reserve's monetary policy meeting and US nonfarm payroll data due later this week.

Spot gold rose by 0.2% to $2,342.33 per ounce at 1038 GMT, staying above its 21-day moving average of $2,336. Last week, gold fell by 2.2% amid easing tensions in the Middle East and fading expectations of an early interest rate cut in the United States this year. According to the CME's FedWatch tool, investors only anticipate a single rate cut this year, likely in November.

Before last week's decline, five consecutive weeks of gains had propelled gold to a historic high of $2,431.29 on April 12, driven by strong central bank purchases and demand from Chinese retail investors amid a weaker yuan.

"A seasonal pullback in regional (Chinese) demand is likely to occur by mid-2024, but a structurally stronger consumption trend through the retail channel and the PBOC (People's Bank of China) favors a rise in the minimum gold price," Citi said in a note. Its base case hypothesis anticipates gold reaching $3,000 over the next 12-15 months.

Markets are focused on the Federal Reserve's monetary policy meeting, scheduled for April 30 to May 1, and the nonfarm payroll data due on Friday. At this meeting, the Federal Reserve is expected to maintain its benchmark interest rate between 5.25% and 5.5%.

Among other precious metals, spot silver rose by 0.9% to $27.40 per ounce. The metal fell by 5.2% last week before finding buyer support below $27.00, according to Frank Watson, a market analyst at Kinesis Money.

Spot platinum gained 1.2% to $926.75, while palladium added 0.5% to $959.33.