Gold prices fell as the dollar strengthened against other currencies, with investors looking ahead to critical US data slated for release 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 at approximately $2,630 per ounce, following a nearly 3% drop last week. The dollar appreciated against the euro amid rising political tensions in France, while the yen weakened as US Treasury yields climbed. A stronger dollar makes gold more expensive for buyers using different currencies, and increasing yields typically put pressure on gold due to its lack of interest returns.

The decrease in gold prices last week was largely attributed to a reduced demand for safe havens following a US-brokered cease-fire agreement between Israel and Hezbollah that came into effect mid-week. However, worries about the escalation of Russia’s ongoing conflict in Ukraine continue to drive demand for safe-haven assets such as gold.

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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. Generally, lower borrowing costs are favorable for gold since it yields no interest.

This precious metal has appreciated by roughly 30% so far this year, driven by the US Fed’s easing monetary policy, increased purchases by central banks, and the rising geopolitical and economic uncertainties. Some analysts predict new record highs in 2025, with both Goldman Sachs Group and UBS Group AG offering positive 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 went up by 0.4%. Prices for silver, platinum, and palladium also experienced declines.

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