Gold prices fell as the dollar strengthened against other currencies, with investors eagerly anticipating significant US data due to be released on Friday, which may shed light on the Federal Reserve’s upcoming interest rate decision later this month.
During early trading in Asia on Monday, bullion was priced around $2,630 per ounce after experiencing nearly a 3% drop last week. The dollar appreciated against the euro amid escalating political tensions in France, while the yen weakened as US Treasury yields increased. A stronger dollar renders gold pricier for buyers using other currencies, and higher yields generally apply downward pressure on gold due to its lack of interest earnings.
The reduction in gold prices last week was partly due to a decrease in demand for safe havens following a cease-fire agreement mediated by the US between Israel and Hezbollah that began mid-week. Nevertheless, ongoing concerns regarding the intensifying conflict in Ukraine continue to support demand for safe-haven assets like gold.
ADVERTISEMENT
CONTINUE READING BELOW
Markets are preparing for the upcoming release of US nonfarm payroll figures later this week, which could influence the Fed’s interest rate decision on December 18. Current market expectations suggest about a 70% chance that the US central bank will reduce benchmark borrowing rates by a quarter percentage point. Typically, lower borrowing rates benefit gold, as it does not provide interest.
So far this year, the precious metal has risen by approximately 30%, driven by the US Fed’s easing monetary policy, central bank purchases, and rising geopolitical and economic uncertainties. Some analysts predict that new record highs could be reached in 2025, with both Goldman Sachs Group and UBS Group AG having issued optimistic forecasts last month.
As of 10:36 a.m. in Singapore, spot gold had decreased by 0.4% to $2,632.22 per ounce. The Bloomberg Dollar Spot Index increased by 0.4%. Prices for silver, platinum, and palladium also experienced declines.
© 2024 Bloomberg
Stay informed with Moneyweb’s extensive finance and business news on WhatsApp here.
