Gold prices declined in the European market on Monday at the beginning of the week’s trading, pressured by correction and profit-taking activity from record levels, in addition to the continued rebound of the US dollar in the foreign exchange market.
On Tuesday, the Federal Reserve’s key monetary policy meeting will begin, with decisions due on Wednesday. Expectations in global financial markets are currently stable around a 25 basis point interest rate cut by the Fed.
Gold prices today: prices fell by 0.45% to $3,626.69 an ounce, from the opening level of $3,642.72, and recorded a high of $3,646.94.
At Friday’s settlement, gold prices rose by 0.25%, the second gain in the past three days, near the all-time high of $3,674.80 an ounce.
Over the past week, gold gained 1.55%, marking a fourth consecutive weekly rise, supported by expectations of Fed rate cuts and mounting global financial stability concerns.
The US dollar index rose on Monday by about 0.1%, maintaining gains for the second consecutive session, reflecting the continued rebound of the US currency against a basket of major and minor counterparts. In addition to buying activity from lower levels, the dollar’s rebound comes amid reluctance to build new short positions ahead of the Fed meeting this week.
The Federal Reserve’s monetary policy meeting begins on Tuesday, with decisions due on Wednesday. Expectations point to a 25 basis point interest rate cut. Monetary policy data, economic projections, and statements from Fed Chair Jerome Powell are expected to provide clear guidance on whether further cuts may follow during the remainder of this year.
According to CME FedWatch: the probability of a 25 basis point rate cut at this week’s meeting is stable at 100%, while the probability of a 50 basis point cut is stable at 4%.
The probability of a 25 basis point cut in October is also stable at 100%, while the probability of a 50 basis point cut stands at 5%.
Tim Waterer, chief market analyst at KCM Trade, said: “Gold appeared technically overbought, which prompted some profit-taking at the start of the new week. The resilience of the dollar is another factor weighing on gold.”
Waterer added: “A period of consolidation is a likely scenario for gold, while any retreat towards support at $3,500 is expected to attract buyers, as long as the Fed maintains its cautious approach.”
Goldman Sachs said in a note on Friday: “While we see upside risks to our $4,000 forecast by mid-2026, elevated speculative positioning increases the likelihood of tactical pullbacks, as investor positions tend to normalize over time.”
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.15 metric tons on Friday, marking a second consecutive daily decline, bringing the total to 974.80 metric tons, the lowest since August 28.
