Gold prices fell on Monday for the second session in a row as investors awaited the release of key U.S. economic data and comments from Federal Reserve officials this week for insight into the future trajectory of monetary policy easing.
In the UAE, gold rates declined AED1.75, with 24-carat gold falling to AED323.50 and 22-carat gold dipping to AED299.50. In addition, 21-carat gold fell AED1.5 to AED290, and 18-carat gold reached AED248.50.
Globally, spot gold slipped 0.55 percent to $2,670.07 per ounce, as of 6:07 GMT, while December gold futures fell 0.68 percent to $2,676.6 per ounce. Gold prices hit an all-time high of $2,790.15 in late October.
Stronger dollar impacts bullion
The recent surge in the U.S. dollar index to a four-month high has impacted gold prices by making bullion more expensive for other currency holders. The dollar gained 0.08 percent to 105.08 on Monday after marking significant gains following the U.S. presidential election.
Gold prices registered their worst week in more than five months on Friday as Donald Trump’s victory in the U.S. presidential election raised fears over the economic implications of policies including higher tariffs, which could keep interest rates higher for longer.
The positive U.S. economic data on Friday also contributed to the dollar’s surge. The U.S. Consumer Sentiment Index rose to 73.0 in November from 70.5 in October, according to the preliminary reading by the University of Michigan. This figure came in better than the market expectation of 71.0.
Analysts expect some easing with interest rate cuts as the Fed signals caution, which could limit the rise in gold prices. Trump’s victory raised questions about whether the Fed may proceed to cut rates at a slower and smaller pace. This, in turn, boosted the greenback and weighed on dollar-denominated gold prices.
Bullion is traditionally considered a hedge against inflation, but higher interest rates raise the opportunity cost of holding non-yielding assets like gold.
Fed’s economic outlook
This week, several Fed officials, including chair Jerome Powell, are scheduled to speak. In addition, traders are awaiting the release of the U.S. consumer and producer price index data, weekly jobless claims, and retail sales data due this week.
In 37 days, the U.S. central bank will meet again to discuss progress on inflation and the labor market. Traders currently see a 65 percent chance of another 25-basis-point Fed rate cut in December and a 35 percent chance of keeping rates steady, according to the CME Fedwatch tool.
China economy signals continued weakness
Elsewhere, consumer prices in China rose at the slowest pace in four months in October while producer price deflation increased, even as Beijing raised stimulus measures to support the faltering economy. Meanwhile, the global economic uncertainty and the ongoing geopolitical tensions in the Middle East might help limit the yellow metal’s losses.
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Other precious metals
Amid the decline in gold prices, the precious metals market saw mixed momentum with spot silver falling 0.13 percent to $31.25 per ounce. However, platinum gained 1.30 percent to $981.20 while palladium rose 0.97 percent to $998.51.
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