Gold prices gained on Monday on a softer dollar, while investor caution set in ahead of the US Federal Reserve's policy meeting where the central bank is expected to deliver a third rate cut this year and provide hints regarding its 2025 outlook.
Spot gold was up 0.6% at $2,663.23 per ounce as of 1222 GMT. US gold futures rose 0.3% to $2,682.50.
The dollar index fell 0.1%, retreating from more than a two-week high reached on Friday, making dollar-priced bullion more affordable for holders of other currencies.
"Market participants are awaiting the FOMC meeting and any guidance on future rate cuts," said UBS analyst Giovanni Staunovo. "We continue to expect a 25-bps cut this week and four more cuts next year."
The Fed is anticipated to lower interest rates by a quarter point at its two-day policy meeting, which starts on Tuesday. It will also offer updated projections on potential rate cuts for 2025 and possibly 2026.
"This (rate cuts) should support further investment demand and lift the gold price to $2,900/oz by mid next year," Staunovo said.
Non-yielding bullion tends to shine in a lower interest rate environment and during economic or geopolitical uncertainty.
Israel said on Sunday it plans to double its population on the occupied Golan Heights, citing Syrian threats despite the moderate tone of rebels who ousted Assad last week.
Gold and silver demand should remain strong until the US and global growth puts in a floor, with buying as a hedge against equity downside, that is until US interest rates get to neutral, Citi said in a note, adding that it sees "gold and silver peaking around 4Q'25/1Q'26."
Besides the FOMC interest rate decision, this week would also see key data releases including GDP figures, the PCE index report and the consumer sentiment (final) reading.
Spot silver rose 0.3% to $30.64 per ounce, platinum edged 0.2% lower at $922.84, while palladium was down 0.2% at $950.11.
