Gold prices fell on Monday as the US dollar remained strong, with investors looking ahead to key economic data for clues on the Federal Reserve’s monetary policy direction.
As of 0527 GMT, spot gold declined by 0.4% to $2,735.47 per ounce, after reaching a record high of $2,758.37 the previous Wednesday. US gold futures also saw a drop of 0.3%, trading at $2,747.70.
The dollar index is on track for its best month since April 2022. A stronger dollar typically makes gold less attractive to holders of other currencies. Tim Waterer, chief market analyst at KCM Trade, noted, “The US dollar has continued its good run of form in the aftermath of the Japanese election, which has dented gold’s appeal.”
Despite the recent downturn, Waterer stated that gold “still looks in good shape to potentially make a push towards $2,800 and beyond,” although it must first navigate several key macroeconomic indicators this week that could influence interest rates.
Key data to be released this week includes:
US employment report
Job openings
Core Personal Consumption Expenditures (PCE) data
These metrics are crucial for assessing the health of the labor market and inflation trends. Current market expectations indicate a nearly 95% chance of a 25-basis-point cut by the Fed in November, which would enhance the appeal of non-yielding bullion.
Gold has also drawn support from uncertainties surrounding the upcoming US election on November 5, where recent polls show a competitive race between Donald Trump and Kamala Harris. Gold is often viewed as a hedge against political and economic instability.
On the physical side, China’s gold consumption fell by 11.18% year-on-year in the first three quarters of 2024, totaling 741.732 metric tons. This decline is attributed to high prices impacting jewelry demand, according to the state-backed gold association.
In addition, other precious metals experienced declines: spot silver was down over 1% at $33.35 per ounce, while platinum fell 0.7% to $1,015.67. Palladium edged down 0.1% to $1,192.31 an ounce, following a rise to a 10-month high in the previous session.
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