Gold prices fell for a second consecutive session on Monday, as a stronger dollar and rising risk appetite weighed on the precious metal, CNBC reports.
Investors are closely watching for signals that the Federal Reserve may adopt a more cautious approach to rate changes under US President-elect Donald Trump’s administration.
Spot gold prices dropped 0.9% to $2,662.59 per ounce, while US gold futures declined 1% to $2,667.10. A strengthening dollar, higher Treasury yields, and a greater appetite for risk in financial markets have contributed to gold’s recent dip, said Ricardo Evangelista, senior analyst at ActivTrades. The dollar index rose 0.3% on Monday following a strong weekly gain, which makes gold less attractive to international buyers. Additionally, the S&P 500 posted its highest weekly percentage gain in a year last Friday.
This marks gold’s worst week in over five months, driven by market expectations of higher tariffs and sustained interest rates under Trump’s policies. IG strategist Yeap Jun Rong noted that Trump’s administration could complicate the Fed’s inflation control efforts, potentially leading the central bank to adopt a slower rate-cutting approach. These factors could add upward pressure to US Treasury yields and support a stronger dollar, which may continue to dampen gold prices.
Market sentiment reflects a lower probability of a Fed rate cut, with traders now pricing in a 65% chance of a 25 basis-point cut in December, down from an 83% likelihood before the election, according to the CME Fedwatch tool.
This week, investors await key economic data releases, including US inflation reports, retail sales figures, and statements from Federal Reserve officials, which may offer further insights into the direction of gold and dollar movements.
