Gold rises as oil and dollar weaken before US inflation data

Gold prices increased on Monday as lower oil prices and a softer US dollar supported bullion demand, while investors monitored upcoming US inflation data for signals on the Federal Reserve's next policy move. Spot gold and futures both gained during the session.

Spot gold rose 0.3% to $4,206.01 per ounce after reaching its highest level since October 2 earlier in the day, while US gold futures for December delivery increased 0.3% to $4,230.40.

Tim Waterer, chief market analyst at KCM Trade, linked gold's advance to changes in energy prices and currency conditions.

"Softer oil prices on the back of Trump's reported energy ceasefire between Russia and Ukraine, combined with a more subdued dollar, have given gold a window of opportunity to the upside to start the week," said Tim Waterer, chief market analyst at KCM Trade.

Waterer added that easing oil prices reduced some inflation and interest rate concerns, which affected the appeal of non-yielding assets such as gold.

"As oil eases, it takes some of the immediate inflation and interest rate anxiety out of the market, which helps gold from a yield perspective," said Tim Waterer, chief market analyst at KCM Trade.

The US dollar remained muted, according to market data cited by CNBC, making dollar-priced gold more affordable for buyers using other currencies. Higher interest rates generally weigh on bullion because it does not provide yield.

US President Donald Trump announced an energy ceasefire between Russia and Ukraine on Sunday, saying it was effective immediately, while Ukrainian leader Volodymyr Zelenskiy said he was still awaiting details of the agreement.

"effective immediately" said Donald Trump, US President.

Oil prices declined as markets expected additional Russian supply following the announcement. Investors are now focused on the US Consumer Price Index report scheduled for Wednesday, followed by Producer Price Index and retail sales data on Thursday.

According to CME's FedWatch tool, traders saw a 17% chance of a rate hike in October and an 86% probability of an increase by December. US consumer sentiment also weakened in early October as higher living costs linked to the Middle East conflict affected household views of the economy.