Gold fell with the rise of USD, focus on US inflation data

Gold prices experienced a decline on Monday as expectations of an early US interest rate cut diminished, leading to a strengthening dollar and higher Treasury yields. As investors awaited crucial inflation data later in the week, the precious metal faced headwinds.

As of 0556 GMT, the spot price of gold dropped by 0.7 percent, settling at $2,030.49 per ounce. Simultaneously, US gold futures registered a 0.6 percent decrease, reaching $2,037.00 per ounce. Trading activity in Asia was subdued, with the Japanese market closed for a holiday.

The dollar index saw a 0.1% increase, building on its best week since July 2023 recorded on Friday. This upward movement made gold more expensive for holders of alternative currencies. Additionally, benchmark 10-year US Treasury bond yields surpassed four percent.

Official data revealed that US employers added more workers than anticipated in December. However, separate data from the Institute for Supply Management indicated a significant slowdown in the services sector last month.

Investor sentiment, as reflected by CME’s FedWatch tool, showed a decline in expectations for a rate cut by the Federal Reserve in March. Currently, about 64 percent of investors anticipate a rate cut, down from approximately 90 percent at the beginning of the year.

Attention now turns to the release of the US Consumer Price Index data on Thursday, which is expected to provide insights into expectations regarding the pace of interest rate cuts by the US Central Bank.

In the realm of other precious metals, silver experienced a 0.8 percent decline in spot transactions, reaching $22.97 per ounce, while platinum saw a 0.6 percent drop, settling at $954.13. Palladium, on the other hand, incurred a 1.3 percent loss, reaching $1,013.78, marking the tenth consecutive session of decline.