Bullion prices have been bolstered by a weaker dollar

Gold prices hit their highest level since May on Monday, hovering above $2,000 per ounce, thanks to a weaker US dollar and speculation that the Federal Reserve’s interest rate hike cycle is over.

Spot gold was up 0.6% at $2,012.92 per ounce by 10:19am GMT after hitting its highest level since May 16 at $2,017.82, according to Reuters. US gold futures also rose 0.5% to $2,013.80. Bullion first breached the key psychological threshold of $2,000 per ounce last week.

The greenback fell 0.1% against a basket of currencies on Monday, moving closer to the two-month low it touched last week. A weaker dollar typically makes gold less expensive to buy for holders of other currencies.

The bullion’s uptrend has also been driven by speculation that the US Federal Reserve will not raise interest rates any more, as recent preliminary figures suggested a slowdown in inflation. Lower interest rates reduce the opportunity cost of holding non-interest-bearing assets, often boosting gold prices, Reuters explained. New official US inflation data is due later this week.

READ MORE: European country imports ‘banned’ Russian gold

Gold has been rallying since the start of the conflict between Israel and Palestinian armed group Hamas in early October. Experts and traders expect the uncertainty in the Middle East to continue to drive up the price of gold, which is traditionally seen as a safe haven during periods of economic instability.

For more stories on economy & finance visit RT’s business section