Gold prices hovered around the US$4,200 level during Monday's Asian deals, with the precious metal treading cautiously as markets headed into a pivotal week for United States monetary policy.
By 3:55 pm AEDT (4:55 am GMT), spot gold was 0.2% higher at US$4,208.40 per ounce, remaining within last week’s trading band as investors balanced a softer U.S. dollar with uncertainty ahead of the Federal Reserve’s final meeting of the year.
Sustained weakness in the greenback, coupled with simmering geopolitical tensions between Japan and China, continued to underpin bids for the metal.
Japanese Defence Minister Shinjiro Koizumi said on Sunday that Chinese fighter jets had twice directed fire-control radar at its F-15 aircraft over international waters near Okinawa.
Beijing, however, accused Japanese jets of disrupting its training exercises.
Despite the supportive backdrop, gold’s upside remains constrained, with traders wary of hawkish guidance from the Fed.
Markets widely expect a 25 basis-point cut to take the federal funds rate to 3.5%–3.75%, with odds sitting at 88.4% according to the CME Group FedWatch Tool.
The central bank’s guidance on the 2026 rate path is expected to be a key driver for the metal in the coming sessions.
A run of lacklustre U.S. economic data has reinforced the case for a dovish tilt, helping keep gold supported.
