Gold prices fell on Monday, ending a four-day winning streak due to a robust rally in the U.S. dollar and investor anticipation for critical economic data and Federal Reserve commentary regarding interest rates.
Key Highlights:
Market Performance:
Spot gold (XAU=) decreased by 0.6%, trading at $2,636.54 per ounce as of 1:41 p.m. ET (1841 GMT), after a peak decline of 1% earlier in the day.
U.S. gold futures (GCv1) settled 0.8% lower at $2,658.50.
Dollar Influence:
A stronger dollar, influenced by comments from U.S. President-elect Donald Trump, pressured gold prices. Trump urged BRICS nations to avoid creating alternatives to the dollar, threatening 100% tariffs for non-compliance.
This situation heightened concerns that U.S. interest rates might remain elevated for an extended period, contributing to a 3% drop in gold prices in November, marking the sharpest monthly decline since September 2023.
Market Sentiment:
Peter Grant, vice president and senior metals strategist at Zaner Metals, noted that while gold has reduced its losses, persistent geopolitical uncertainties are providing some support. He anticipates a choppy, consolidative gold market as the year concludes.
Dollar Index Surge:
The dollar index (.DXY) surged 0.7%, positioning it for its strongest daily performance in nearly four weeks, which made gold more expensive for buyers using other currencies.
Upcoming Economic Data:
Key U.S. economic indicators this week include job openings data, the ADP employment report, and non-farm payrolls. Additionally, speeches from Federal Reserve officials, including Chair Jerome Powell, are expected to attract significant attention.
Future Outlook:
Analysts from BMI highlighted potential downside risks for gold in 2025, predicting significant volatility as the Federal Reserve adopts a more cautious stance on interest rate cuts, which could negatively impact gold prices.
Following last month’s 25-basis-point reduction to 4.50%-4.75%, market expectations for another cut in December stand at 64%, consistent with major brokerage forecasts.