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Gold has been declining since the opening of daily trading on Monday, pressured by the rise of the US dollar, which benefited from the decline in expectations of a 50-basis-point Federal Reserve interest rate cut, which led to a decline in fears that the US currency is close to exiting the high-yielding assets group.
The precious metal contracts fell to $2,667 per ounce, compared to the previous daily close of $2,674 per ounce. Gold futures rose to their highest level in the first session of the new week’s trading at $2,673, compared to their lowest levels recorded at $2,660.
The US dollar continues to rise since the beginning of daily trading on Monday, affected by a decline in expectations of a 50-basis-point interest rate cut due to US consumer price data that highlighted a rise in prices to levels higher than market expectations.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, also made statements in which he indicated that he prefers to cut interest rates gradually, saying: “I see that a modest reduction” in interest rates may be appropriate in the next quarter of this year.
The dollar index, which measures the performance of the US currency against a basket of major currencies, rose to 103.19 points, compared to the previous daily close of 102.89 points. The index fell to levels on the first trading day of the new week at 102.93 points, compared to the lowest levels recorded at 103.27 points.
The US Dollar Index (DXY) rose by 0.38% to 103.30, its highest level since early August 2024.
China’s Disappointing News
Over the weekend, data indicated that China’s economy is facing deflationary pressures that could hinder its achievement of the 5% GDP growth target. In response, China’s Finance Minister, Lan Foan, announced plans for continued government stimulus, property market support, and replenishment of state bank capital.While the US bond market was closed for Columbus Day, gold prices declined amid a strengthening US dollar.
Some Fed officials suggested further interest rate cuts, citing a strong labour market and progress in reducing inflation to 2%.
Geopolitical tensions, particularly between Israel and Iran, will also influence gold prices. Israel convened a security meeting to discuss its response to recent attacks in Tel Aviv.
This week’s US economic calendar includes the New York Empire State Manufacturing Index on Tuesday and the Balance of Trade on Wednesday. Federal Reserve members will also be making public statements throughout the week.
