Gold prices fell on Monday as the U.S. dollar firmed, while investors awaited U.S. economic data for additional insight into the Federal Reserve‘s monetary policy trajectory in November.
In the UAE, gold rates declined AED1.75 with 24-carat gold falling to AED331 and 22-carat gold declining to AED306.50. In addition, 21-carat reached AED296.50 and 18-carat gold hit AED254.25.
Globally, spot gold dipped 0.39 percent to $2,738.91 as of 5:08 GMT after hitting a record $2,758.37 last week. Meanwhile, U.S. gold futures declined 0.13 percent to $2,751.
The dollar index gained 0.14 percent to 104.46, making bullion more expensive for other currency holders. The recent gains placed the dollar on track for its best month since April 2022.
U.S. dollar rises
The U.S. dollar has maintained its upward trajectory, particularly following the Japanese elections over the weekend which impacted the appeal of gold. Traders showed signs of bias towards the dollar in anticipation of the 2024 U.S. presidential election, which is now a week away. Moreover, flows into the dollar were spurred by expectations of increased political uncertainty in Japan, after a coalition led by the ruling Liberal Democratic Party lost its parliamentary majority in a weekend election.
Fed’s interest rate cut decision
Despite the decline, gold still has the potential to rise above the $2,800 level, analysts noted. However, it has to navigate several sets of economic data this week, which may impact the Fed’s November rate cut decision. The market this week awaits the release of the U.S. employment report, job openings, and core Personal Consumption Expenditures (PCE) data, which are vital for assessing the labor market’s health and inflation trends. Gross domestic product data from the U.S. and eurozone is also due this week.
According to the CME FedWatch tool, traders are currently pricing a 94.8 percent chance of a 25-basis-point rate cut next month.
Elsewhere, data released over the weekend revealed that China’s industrial profits fell sharply in September. The country’s purchasing managers’ index data for October is due later in the week and will provide more cues about the health of the economy.
Mideast fears ease
Concerns over a wider regional conflict in the Middle East eased after Israel refrained from attacking Iran’s oil and nuclear facilities in a strike over the weekend. Concerns over a wider regional conflict have been a key point of uncertainty for markets, particularly raising the safe-haven appeal of gold.
Increased uncertainty over the U.S. presidential election is also expected to spur safe-haven demand, especially with recent polls showing a tight race between Donald Trump and Kamala Harris. However, the dollar appeared to be benefiting more from this uncertainty.
As the U.S. gears up for election day on November 5, uncertainty prevails, giving gold room to potentially set a new record high.
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Other precious metals
As gold prices declined, the precious metals market fell with spot silver dipping 0.89 percent to $33.40 per ounce and platinum declining 0.56 percent to $1,017.01. Palladium also declined 0.11 percent to $1,191.99 after hitting a 10-month high in the previous session.
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