Gold prices fell to a three-week low on Monday as the dollar held on to last week’s gains and Treasury yields remained elevated on fading hopes of an early Federal Reserve rate cut, with markets looking ahead to U.S. inflation data this week.
Spot gold was down 1.2% at $2,020.69 per ounce at 1313 GMT, near its lowest level since Dec. 18. U.S. gold futures fell 1.1% to $2,026.80.
"I’m expecting inflation data to be a central catalyst, and data above expectations can add pressure on gold as it can reduce the possibility that they are going to cut rates," Carlo Alberto De Casa, market analyst at Kinesis Money, said.
"In the first quarter of this year, unless inflation is significantly going down, it would be very difficult for central banks to cut rates in 2024."
Ahead of the U.S. consumer price inflation report on Thursday, the market sees about a 69% chance of a Fed rate cut in March, according to the CME FedWatch tool.
The dollar index, which measures the greenback against a basket of other major currencies, was steady after posting its best week since July 2023, with data on Friday showing firms in the U.S. employed more people than expected in December.
Benchmark U.S. 10-year Treasury yields remained above 4%. [USD/] [US/]
"Gold’s performance in the near term will depend on this week's inflation stats, but…the fundamental outlook appears favourable as it is simply a matter of time until interest rates come down," Marios Hadjikyriacos, investment analyst at forex broker XM, wrote in a note.
"The trend of central banks purchasing gold directly is another bullish development that could persist for years if the geopolitical climate remains unstable."
Spot silver was down 1.2% at $22.89 per ounce while platinum fell 1% to $950.96. Palladium lost 1.1% to $1,016.05, down for a tenth session.
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