Gold prices declined on Monday as markets raised bets for a smaller U.S. interest rate cut in November after a strong jobs report signaled a recovery in the labor market. Amid rising geopolitical tensions in the Middle East, investors awaited the release of inflation data and additional comments from Federal Reserve officials for additional insight into the rate cut trajectory.
In the UAE, gold rates declined AED0.75, with 24-carat gold slipping to AED320.50 and 22-carat gold dipping to AED296.75. Additionally, 21-carat gold was at AED287.25, while 18-carat gold settled at AED246.25.
Globally, spot gold fell 0.33 percent to $2,642.72 as of 5:43 GMT while U.S. gold futures lost 0.20 percent to $2,662.35.
U.S. labor market signals recovery
Gold prices eased following a stronger-than-expected September U.S. jobs report on Friday, which eased hopes for a larger Fed rate cut in the next meeting. Signals of a recovering labor market also boosted the dollar index, which continued its recovery this week, rising 0.03 percent to 102.55.
Currently, traders are pricing a 95.7 percent chance of a 25-basis-point rate cut in November, according to the CME FedWatch tool.
This week, traders will await the release of the minutes of the Fed’s last policy meeting in addition to the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data. Several Fed officials are also speaking this week.
Geopolitical risks rise
Fears of a wider conflict in the Middle East may support the flow of safe-haven demand for gold. Lower interest rates and political and economic uncertainty raise bullion’s appeal to investors.
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China’s gold reserves
Elsewhere, China’s central bank held back on buying gold for its reserves for a fifth straight month in September. With gold prices holding steady near their record highs, China may hold back on buying in the short term.
Other precious metals
As gold prices retreated, the precious metals market witnessed mixed movement. Spot silver declined 0.38 percent to $32.05 per ounce while platinum fell 0.32 percent to $984.85. However, palladium gained 0.14 percent to $1,013.50.
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