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On Monday opening, gold prices rallied as markets turned their attention towards the upcoming Dutch elections and Fed’s rate hike decision within the week. Prior to this week’s opening, gold prices struggled in the commodities market and declined in value as investors favored the US dollar over the precious metal.

However, the growing uncertainty on Dutch elections this March 15 has turned traders to the yellow metal instead. The anticipated Fed’s rate hike has also led investors to decrease demand for the greenback, therefore supporting the precious metal for the first day of the week.

Gold opened at $1,205 and reached a high of $1,209.55, up by 0.7% or $8.15 per troy ounce on Monday in European markets and is currently at $1,208.5, up by 0.33% or $4.00 0945 GMT in the COMEX gold futures for April at the time of writing. Meanwhile, spot gold was trading at $1,209.03, which increased by 0.36% or $4.39.

The US dollar index was down by 0.06% or $0.06 to $101.32 against the basket of major currencies, also losing ground against the yellow metal.

Gold Price Analysis

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Last January 27, gold prices got a boost as investors turned to the yellow metal as a safe haven after Trump passed the executive order of banning seven Muslim-majority countries, as well as stating his plans on building a wall between the US and Mexico border. This news drove the dollar index to plunge in global markets, giving support to gold futures.

However, the precious metal plunged in February 28 when the markets waited for US President Donald Trump’s congress speech that day, sending gold prices to decline and the dollar index to climb. Trump’s speech did not favor gold prices well as it declined further by $1,248.2 then. Since the last week of February plunge, gold prices have continued losing ground in the market until it rallied again in recent trading session.

Prior to the recent rally, gold prices recently reached a 9-session low last Friday as it traded $1,204.5, its lowest rate since January 31 at $1,194.5. Gold prices plunged last Friday due to the positive US jobs data, further fueling the likelihood of Fed passing a rate hike within this week.

Because of the inverse relationship gold and the greenback has, one another’s value is heavily affected most of the time, which mean when the dollar goes down, gold prices climb and when gold prices go up, the US dollar depreciates in value.

Price Drivers

The upcoming Dutch elections on March 15 have affected the movement of the yellow metal during the Monday opening in European markets. The growing uncertainties over the possible outcome of the elections has driven gold prices to climb, as many investors turned to this commodity as a safe haven for investments.

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“Gold should find some safe-haven bids at these levels this week as the Dutch election became more fraught over the weekend,” said a market analyst from OANDA.

Even though most polls suggested that Geert Wilder, a right-wing Freedom Party Prime Minister candidate recently loss his position in the lead for the Dutch elections, there are still several analysts who are weary that the outcome of the election could result in a Brexit or Trump victory outcome by the end of the week.

Still, the commodity’s value can plunge as the increasing probability of the Federal Reserve raising interest rates grows stronger. Should the US central bank go through with its March rate hikes, gold’s value is set to decline even further. The White House is also anticipated to release its budget by Thursday.

On recent surveys, the chances of a rate hike this week rose to 93%, further putting pressure on various markets.

Other Commodities

Meanwhile, for other precious and industrial metals, silver futures on the COMEX rose 1.31% or $0.22 to $17.15 per troy ounce, while copper traded 1.33% higher or $3.45 to $262.95, and platinum spot climbed $3.99 or 0.40% to $946.27 per troy ounce.

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