Mubasher: Gold prices rose on Monday amid expectations that the US Federal Reserve might apply brakes on its monetary tightening path this year.

By 8:52 am GMT, US gold futures climbed 0.46% to $1,291.70 per ounce, while spot gold rose 0.39% to $1,291.02 per ounce.

Fed chairman Jerome Powell on Friday said that he is aware of the risks related to an economic downturn, and the central bank would be patient and flexible in steering the course of the monetary policy this year.

While the US dollar is weak, offering support for the precious metal, “Jerome Powell’s views on Friday about the future of interest rate hikes is a bullish factor for gold,” Tokyo-based ICBC Standard Bank branch manager Yuichi Ikemizu told Thomson Reuters.

Investors expected the Fed to remain on its tightening course after three rate hikes last year, but the ongoing trade conflict and recent disappointing corporate profits have brought these expectations to rest.

Rising interest rates have a high impact on gold, as they lift the opportunity cost of holding non-yielding bullion.

“Given the state of sentiment in overall investment circles, it does appear that the key factor here is a weaker US dollar,” CMC Markets and Stockbroking chief strategist Michael McCarthy told Reuters.

Markets’ focus would be directed to remarks by Federal Reserve, while gold prices would remain buoyed, if the greenback continues to weaken, McCarthy said.

In addition, markets would look towards trade talks in Beijing between the US and China, due to start later in the day.

US President Donald Trump on Friday said that China’s weakening economic growth gives Washington a strong position in negotiations, raising hopes for a probable trade accord between the world’s two largest economies.

However, a relief rally in Asian stock markets fuelled by the Fed’s dovish approach as well as strong US job figures kept a lid on gold’s upward pace.