On Monday, gold prices fell, impacted by a stronger dollar as investors reevaluated their outlook for further Federal Reserve rate cuts following Chair Jerome Powell’s assertive remarks from the prior week. Furthermore, the reduction of trade tensions between the U.S. and China played a role in the downward pressure on bullion. Spot gold saw a decrease of 0.8%, trading at $3,968.76 per ounce, as of 0016. Gold futures in the U.S. for December delivery fell by 0.5%, closing at $3,978.30 per ounce. The U.S. dollar held steady near three-month highs reached last week, leading to higher costs for bullion priced in dollars for those holding other currencies.

The U.S. central bank lowered interest rates on Wednesday by 25 basis points for the second time this year, setting the benchmark overnight rate to a target range of 3.75%-4.00%. Gold, lacking interest yield, often excels in settings marked by low interest rates and times of economic uncertainty. Traders currently assign a 71% probability to the Fed implementing a rate cut in December, a decrease from the over 90% likelihood observed prior to Powell’s comments, according to the reports.

On Thursday, U.S. President Donald Trump revealed that he has come to an agreement with Chinese President Xi Jinping regarding the reduction of tariffs on China. In exchange, Beijing is anticipated to implement actions against the illegal fentanyl trade, restart purchases of U.S. soybeans, and uphold the export of rare earths. According to Treasury Secretary Scott Bessent, certain sectors of the U.S. economy, especially housing, might already be facing a recession as a result of high interest rates. He emphasized his call for the Federal Reserve to accelerate rate cuts during his remarks on Sunday.

Gold has increased by 51% this year, supported by geopolitical and economic uncertainties, anticipated U.S. rate cuts, and continued buying by central banks. Bullion prices hit a remarkable high of $4,381.21 on October 20; however, they have since dropped by more than 10%, partly due to the easing of trade tensions. Meanwhile, SPDR Gold Trust, the largest gold-backed exchange-traded fund globally, reported a decline in its holdings by 0.11%, decreasing to 1,039.20 metric tons on Friday from 1,040.35 tons on Thursday. Elsewhere, spot silver declined by 0.5% to $48.41 per ounce, platinum decreased by 0.1% to $1,566.40, and palladium experienced a loss of 0.6%, settling at $1,424.88.