Gold prices fell on Monday, affected by a stronger dollar and signs of easing U.S.-China trade tensions, which diminished the attractiveness of the safe-haven metal. At the same time, investors stayed focused on important central bank meetings set for later this week. Spot gold saw a decrease of 0.5%, trading at $4,092.76 per ounce as of 0120, while gold futures in the U.S. for December delivery fell by 0.7%, closing at $4,106.80 per ounce.
The U.S. dollar rose to a level not observed in more than two weeks against the yen, leading to a higher cost of gold for those holding other currencies. On Sunday, top economic officials from China and the United States held talks to define the framework of a trade agreement for review by President Donald Trump and President Xi Jinping later this week. According to U.S. officials, this agreement seeks to halt the enforcement of stricter American tariffs and Chinese export limitations on rare earth materials.
Meanwhile, the Federal Reserve is expected to lower the interest rate by a quarter percentage point at its upcoming meeting on Wednesday. Market participants are ready to closely examine any forward-looking comments from Fed Chair Jerome Powell, as the U.S. central bank is widely expected to make further rate cuts in its December meeting. Gold, known for being a non-yielding asset, usually benefits from a low-interest-rate setting. Meanwhile, U.S. consumer prices rose by 3% over the 12 months ending in September, as reported on Friday, slightly below the expected increase of 3.1% by analysts.
In India, physical gold demand fell last week as buyers held back on purchases, anticipating a larger price correction, while a drop in rates sparked buying interest in China and Singapore. SPDR Gold Trust, known as the largest gold-backed exchange-traded fund in the world, reported a decrease in its holdings of 0.52%, falling to 1,046.93 tonnes on Friday from 1,052.37 tonnes on Thursday. Elsewhere, spot silver decreased by 0.3% to $48.44 per ounce, while platinum increased by 0.5% to $1,612.95 and palladium saw a rise of 0.2% to $1,431.94.