Gold stabilized after posting its first weekly gain since May, supported by fading expectations that the US Federal Reserve will raise interest rates.

The precious metal was near $4160 an ounce, after rising more than 2% last week. Weak US jobs data and lower energy prices prompted traders to scale back their bets on monetary policy tightening.

Oil fell on Monday as more tankers moved through the Strait of Hormuz and OPEC+ signaled an increase in supplies.

Manav Modi, commodity analyst at Motilal Oswal Financial Services, said: "Gains remained limited as inflation continues to run above the Fed's target, keeping policymakers cautious about easing financial conditions."

Sun, 05 2026

He added: "While lower oil prices have eased concerns about energy-driven inflation, markets continue to monitor broader price pressures from AI-related investment demand and weather-related supply disruptions."

Oil eases inflation pressure on gold

Crude prices, which were a major driver of inflation at the start of the US-Iran conflict, recorded their biggest quarterly drop since 2020, as energy flows through the strait increased following a temporary peace agreement between the US and Iran.

That has eased some inflationary pressures that weighed on non-yielding gold, which tends to perform better when borrowing costs are lower. The Bloomberg Dollar Index was poised for its first gain in three days on Monday.

Meanwhile, US President Donald Trump and his allies renewed efforts to reshape the Federal Reserve, after the Supreme Court last week blocked an attempt to dismiss Governor Lisa Cook.

Senior officials and outside allies are actively exploring ways to remove members from the central bank's Board of Governors in Washington, to pave the way for more of the president's own picks, according to people familiar with the matter.

Repeated challenges to Fed independence from the Trump administration helped drive gold's strong rally in the final months of 2025, as part of the so-called 'currency debasement trade,' a bet on inflation and rising debt burdens in advanced economies.

Spot gold fell 0.3% to $4166.47 an ounce as of 11:35 a.m. in Singapore. Silver declined 0.7% to $61.98 an ounce.

Platinum and palladium saw little change, while the Bloomberg Dollar Spot Index, a gauge of the US currency, rose after giving up 0.3% last week.