Gold prices reversed a four-day rally on Monday, declining due to a stronger U.S. dollar and profit-taking, as investors awaited key U.S. economic data for insights into the Federal Reserve’s monetary policy direction. Spot gold dropped 0.7% to $2,636.38 per ounce, while U.S. gold futures fell 0.8% to $2,658.80. IG market strategist Yeap Jun said profit-taking was driven by the unwinding of some geopolitical risk premium and the dollar’s strength. The dollar index gained 0.5%, making gold more expensive for holders of other currencies.
This week’s major U.S. data includes job openings, the ADP employment report, and the payrolls report. The Fed will also hear from a few officials, including Chair Jerome Powell on Wednesday. According to the CME Group’s FedWatch Tool, markets expect a 65.4% chance of a 25-basis-point rate cut in December. However, if the Fed signals a rate hold into 2025, gold prices could face further downward pressure, as higher rates reduce gold’s appeal due to its lack of yield.
Gold fell more than 3% in November, marking its worst monthly performance since September 2023, amid expectations of higher tariffs and prolonged interest rates under a potential Trump administration. Other metals also declined, with silver, platinum, and palladium each losing ground.
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