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Gold prices experienced a decline on Monday, driven by the strength of the US dollar, as investors eagerly anticipated significant central bank meetings and the release of crucial US inflation data later in the week. Spot gold saw a 0.2% drop, reaching $1,998.89 per ounce as of 0232 GMT, following a 3.3% decrease last week, marking its worst performance in over two months. Concurrently, US gold futures remained unchanged at $2,014.80.
KCM Trade Chief Market Analyst Tim Waterer noted that a robust jobs report on Friday led to a shift in expectations for the Federal Reserve in the upcoming year. This resulted in a temporary relief for the dollar and bond yields, exerting downward pressure on gold prices.
The US nonfarm payrolls data for November, released last month, exceeded expectations by recording an increase of 199,000 jobs, prompting a reassessment of the likelihood of an early interest rate cut by the Federal Reserve. Traders adjusted their expectations, scaling back the possibility of a rate cut as soon as March.
Market focus now turns to the November US consumer price report scheduled for Tuesday, providing additional insights into the interest rate trajectory ahead of the Federal Reserve statement and Chair Jerome Powell’s comments on Wednesday. The Fed is widely anticipated to maintain interest rates at 5.25-5.50% this week. Simultaneously, the European Central Bank, Bank of England, Norges Bank, and the Swiss National Bank are all set to convene their respective meetings on Thursday.
Traditionally, lower interest rates offer support to non-interest-bearing assets like gold. Waterer emphasized that the outcome of the Federal Open Market Committee (FOMC) meeting and inflation data would be critical in determining whether gold can sustain levels above $2,000.
In the speculative arena, COMEX gold speculators reduced their net long position, reflecting a decrease of 11,895 contracts to reach 132,515 in the week ending December 5.
While spot silver experienced a marginal 0.1% rise to $23.98 per ounce, platinum remained steady at $915.31, and palladium saw a 0.7% dip to $941.11 per ounce. The precious metals market awaits further developments as key economic indicators unfold throughout the week.
