Gold falls as US dollar strengthens, markets brace for Fed’s next move

REUTERS: International gold prices snapped a four-session rally to fall on Monday, pressured by a firmer US dollar and profit-taking, while investors awaited key US economic data for cues on the Federal Reserve’s monetary policy outlook.

Spot gold fell 0.7 per cent to $2,636.38 per ounce, as of 0204 GMT.

US gold futures edged 0.8 per cent lower to $2,658.80.

“The yellow metal has been facing some profit-taking lately as market participants unwind some of the geopolitical risk premium, alongside the strength in the US dollar,” said IG market strategist Yeap Jun Rong.

The dollar index gained 0.5 per cent, making bullion costlier for holders of other currency.

Major US data due this week includes US job openings, the ADP employment report and the payrolls report. Few Fed officials are due to speak this week, including Fed Chair Jerome Powell on Wednesday.

According to the CME Group’s FedWatch Tool, markets currently see a 65.4 per cent chance of a 25-basis-points rate cut in December.

“If the Fed was to set the stage more clearly for a potential rate hold into 2025, we may likely see gold prices weigh further,” Rong said.

Higher rates dull the non-yielding bullion’s appeal.

Gold prices slipped over 3 per cent in November to register its worst monthly performance since September 2023 as the prospect of higher tariffs under the incoming Donald Trump administration to keep interest rates higher for longer loomed.

Trump on Saturday demanded that the BRICS countries commit to not creating a new currency or supporting another currency that would replace the US dollar or face 100 per cent tariffs.

Among other metals, spot silver shed 0.7 per cent to $30.39 per ounce, platinum fell 0.2 per cent to $944.20 and palladium dropped 0.3 per cent to $975.44.

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