Gold prices fell in the European market on Monday, extending losses for the third consecutive session and moving away from a three-week high, as corrective moves and profit-taking continued, while the U.S. dollar’s strength in the foreign-exchange market added further downward pressure.
Recent comments from several Federal Reserve officials were more hawkish than markets expected and showed caution toward further monetary easing, which pushed down expectations for a U.S. rate cut in December.
Price Overview
Gold prices fell 0.85% to 4,049.72 dollars, from the opening level of 4,083.56 dollars, and recorded a high of 4,106.90 dollars.
At Friday’s settlement, gold prices lost 2.1%, marking a second straight daily decline as corrective moves and profit-taking continued from the three-week high at 4,245.13 dollars per ounce.
The precious metal posted a 2.2% gain last week, its first weekly advance in a month, supported by improved safe-haven demand and weakness in the U.S. dollar.
U.S. Dollar
The U.S. dollar index rose 0.2% on Monday, extending gains for the second straight session as it continued recovering from two-week lows, reflecting ongoing strength against a basket of global currencies.
This rebound comes amid growing demand for the dollar as the best available investment in the foreign-exchange market, especially as expectations for a Federal Reserve rate cut at the December meeting decline.
U.S. Interest Rates
Over the past week, and contrary to prevailing market expectations, a growing number of Federal Reserve policymakers expressed caution regarding further easing.
Following those remarks, and according to the CME FedWatch tool, market pricing for a 25-basis-point rate cut in December declined from 67% to 43%, while pricing for no change increased from 33% to 57%.
To reassess those expectations, investors are closely monitoring comments from Federal Reserve officials, along with the anticipated resumption of government economic data releases this week.
Gold Outlook
Tim Waterer, chief market analyst at KCM Trade, said the Fed’s rate-cut expectations for next month are effectively restraining gold’s performance from a yield perspective.
Waterer added that despite the end of the government shutdown, there is no guarantee that markets—or even the Federal Reserve—have a full picture of economic conditions, noting that the hawkish tone from Fed officials does not help gold in any way.
SPDR Fund
Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by about 4.93 metric tons on Friday, bringing the total to 1,044 metric tons, down from 1,048.93 metric tons—the highest level since October 22.
