Gold Prices Take a Tumble Amid Dollar Strength and Market Uncertainty
Gold prices took a hit on Monday, snapping a four-day winning streak as investors took profits and the U.S. dollar strengthened. This dip comes ahead of a crucial week packed with economic data releases that could provide further clues about the future direction of interest rates.
Market strategist Yip Jun Rong from IG observed, "The yellow metal has been subject to profit realistically recently, with geopolitical risks receding, as well as the strength of the US dollar."
The rise in the dollar, fueled by expectations of further interest rate hikes, makes the U.S. currency more expensive for holders of other currencies, potentially dampening demand for dollar-denominated assets like gold.
All Eyes on Key Economic Data
This week, traders will be closely monitoring a series of economic reports that could significantly impact expectations for U.S. monetary policy. The focus will be on job openings data, the ADP employment report, and the official nonfarm payrolls report from the Department of Labor.
Further adding to the anticipation, several Federal Reserve officials, including Chairman Jerome Powell, are scheduled to speak, offering their insights on the economic outlook and potential interest rate decisions.
Currently, markets predict a 67.1% chance of a 25 basis point interest rate increase in December. "If the Fed signals more definitively that they intend to keep interest rates steady through 2025, gold prices are likely to face additional downward pressure," Rong cautioned. Higher interest rates tend to make non-yielding assets like gold less attractive to investors.
November Woes for Gold
Gold prices experienced a rough November, falling more than 3% and marking their poorest performance since September 2023. This downturn followed fears that prolonged elevated interest rates under the incoming Biden administration could dampen economic growth and curb demand for gold.
Adding to the uncertainty, President Trump issued a stark warning, threatening 100% tariffs on BRICS countries that fail to agree not to create a new currency or support an alternative to the U.S. dollar.
Prices at Settlement:
Despite a Friday rally fueled by a weakening dollar and easing U.S. Treasury yields, gold closed out the month with its worst monthly performance since September 2023, down 4.85%. Spot gold settled at $2,681 an ounce, representing a 1.55% gain for the day but a weekly loss of 1.15% and a monthly loss of 2.5%.
In current trading, spot gold is down 1.1% at $2,625 an ounce, while gold futures have slipped 1.2% to $2,648.40. The U.S. Dollar Index is up 0.4% at 106.25 points.
Meanwhile, other precious metals also saw declines. Silver spot prices dipped 1.6% to $30.10 an ounce, platinum fell 0.6% to $939.90, and palladium dropped 1% to $968.37.
2024-12-02 07:42:00
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