The price of gold fell on Monday, weighed down by the rise in the US dollar, as investors awaited further clues on interest rate cuts from the Federal Reserve.
Spot gold was down 0.2% at $2,651.99 an ounce by 0252 GMT after rising 1% in the previous session. U.S. gold futures lost 0.3% to $2,669.20.
The dollar index rose 0.1% on Monday, not far from a near two-month high reached last week. A stronger dollar makes bullion less attractive to holders of other currencies. [USD/]
“Continued momentum in the U.S. currency on rate cut expectations has created a headwind for the gold price,” said Tim Waterer, chief market analyst at KCM Trade.
Traders see there as being about an 89% chance that the Fed will cut rates by 25 basis points at its November meeting, and an 11% chance that it will leave rates unchanged.
Data on Friday showed that U.S. producer prices remained unchanged last month.
Zero-yielding bullion is favored in a low interest rate environment as well as in times of economic and geopolitical unrest.
In the meantime, investors will be watching comments from Fed officials this week for more clues on upcoming rate cuts, as well as U.S. retail sales data.
“If the Fed’s interventions this week cast doubt on the number of rate cuts between now and the end of the year, any resulting rise in the dollar could result in a retest of the Fed’s support levels. gold around $2,600,” Mr. Waterer said.
Elsewhere, China said on Saturday it would “significantly increase” debt to revive its flagging economy, but left investors uncertain about the overall scale of the stimulus package. Data showed that Chinese consumer inflation fell unexpectedly in September, while producer price deflation worsened.
Spot silver fell 1.3% to $31.1275 an ounce and latinum lost 1.2% to $972.90. Both metals ended a series of two rising sessions.
Palladium extended its decline, falling 1.6% to $1,051.81.
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