Gold prices slipped on Monday, ending a four-day winning streak, as the U.S. dollar rallied sharply. Investors turned cautious ahead of key economic data releases and insights from the Federal Reserve regarding its future interest rate policy.
As of 1:41 p.m. ET (1841 GMT), spot gold was trading 0.6% lower at $2,636.54 per ounce, having earlier fallen by as much as 1%. U.S. gold futures also declined, settling 0.8% lower at $2,658.50 per ounce.
The dollar’s strength put pressure on gold prices, fueled in part by remarks from U.S. President-elect Donald Trump. Trump suggested that BRICS nations should refrain from efforts to replace the U.S. dollar, warning of potential 100% tariffs for countries in defiance. His comments stoked concerns that the Federal Reserve may keep interest rates higher for an extended period, which could weigh on gold, a non-yielding asset. These fears contributed to a 3% drop in gold prices in November, marking the sharpest monthly decline since September 2023.
However, the decline in gold prices was tempered by ongoing geopolitical uncertainty, which continues to provide some support for the precious metal. Analysts suggest that while gold may face some downside pressure, significant losses are unlikely in the short term, with a choppy, consolidative market expected to continue into the year-end.
The dollar index (.DXY) surged 0.7%, reaching its strongest daily performance in nearly four weeks, further contributing to the pressure on gold. The strengthening dollar made the metal more expensive for buyers using other currencies.
Looking ahead, key U.S. economic events this week will include the release of job openings data, the ADP employment report, and the non-farm payrolls report. Additionally, speeches from Federal Reserve officials, including Chairman Jerome Powell, are expected to be closely watched for indications of the central bank’s stance on interest rates.
Analysts are cautious about the outlook for gold in 2025, forecasting significant volatility. With the Federal Reserve likely to adopt a more measured approach to rate cuts, gold may face additional challenges in the coming year.
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