Gold prices posted a strong rebound on Monday, fully recovering last week's losses as traders positioned themselves ahead of the Federal Reserve’s upcoming interest rate decision. June gold futures surged $94.20, or 2.89%, to close at $3,341.30 per ounce, rallying from an intraday low of $3,243.50 and nearly reaching a session high of $3,346.70.
The rally not only reversed last week's 2.49% loss but marked a net gain. Although trading volume was relatively light at about 182,000 contracts, the move highlighted growing investor nervousness amid rising macroeconomic uncertainty.
Markets are closely watching the Federal Reserve, which is set to announce its latest policy decision on Wednesday, May 7. The current forecast suggests the Fed will hold rates steady within the 4.25%–4.50% range, with CME FedWatch data showing a 95.6% chance of no change and only a 4.4% chance of a cut.
A modest 0.27% drop in the U.S. Dollar Index to 99.60 provided some tailwind for gold, but the main driver was unease over potential economic disruption. President Trump’s recent proposal to impose 100% tariffs on foreign-produced films raised concerns about renewed trade conflicts, prompting many to seek safety in gold.
Despite some recent reductions in large institutional positions, gold remains up nearly 25% year-to-date, outperforming most asset classes. The recent momentum reflects a recalibration of expectations in light of ongoing political and economic tensions.
Last Friday’s stronger-than-expected U.S. nonfarm payrolls report also weighed into the Fed’s outlook, suggesting labor market strength. That data may give the central bank reason to keep rates unchanged in the near term.
For the remainder of the week, gold’s performance will serve as a key indicator of how investors are interpreting inflation expectations, future rate trajectories, and overall economic stability.
With policy uncertainty in focus, gold continues to play a vital role as a safe-haven asset, potentially positioning itself for further gains should uncertainty persist.
