May 5 (Reuters) – Gold prices rose by more than 2% on Monday, buoyed by a weaker US dollar and strong safe-haven demand as investors look ahead to the U.S. Federal Reserve’s upcoming policy decision later this week.
Spot gold gained 2.3%, reaching $3,315.09 an ounce at 1:52 p.m. ET (1752 GMT), while U.S. gold futures closed 2.4% higher at $3,322.30.
The dollar index (.DXY) declined by 0.1%, making gold more affordable for holders of other currencies. This shift came as U.S. President Donald Trump announced a 100% tariff on movies produced overseas, reigniting concerns over the potential impact of a global trade war.
“We are seeing continued safe-haven demand, which is keeping gold prices elevated. We expect prices to remain above the $3,000 level at least in the near term,” said Jim Wyckoff, senior analyst at Kitco Metals. He added that while no change in interest rates is anticipated during this meeting, market participants will be closely watching the Federal Reserve’s tone for future policy direction.
Traders are eagerly awaiting comments from Fed Chair Jerome Powell on Wednesday for further clues regarding the central bank’s interest rate plans. The Fed has maintained its policy rate within the 4.25%-4.50% range since December, but with uncertainty surrounding Trump’s tariffs, the economic outlook remains clouded.
Gold, traditionally seen as a hedge against economic uncertainty, has flourished in a low-interest-rate environment, hitting multiple record highs and gaining over 26% so far this year. Goldman Sachs predicts that gold will continue to outperform silver, though it expects renewed demand for gold in 2025 to also lift silver prices.
Spot silver rose 1% to $32.31 an ounce. Meanwhile, platinum dropped 0.4% to $956.05, and palladium fell 1.5% to $939.55.
