Gold prices fell on Monday, impacted by a strong dollar near six-month highs and lowered expectations for a December interest rate cut by the U.S. Federal Reserve. Spot gold saw a decrease of 0.3%, trading at $4,051.48 per ounce, as of 0132. Gold futures in the U.S. for December delivery rose by 0.7%, hitting $4,049.50 per ounce. The dollar hit a near six-month high on Friday, following signs of accelerated job growth in the U.S. for September, suggesting that the central bank is likely to hold off on cutting interest rates in December. An appreciating dollar raises the price of gold in dollars for those holding other currencies.
Minutes from the Federal Reserve’s October meeting, released on Wednesday, indicated that policymakers reduced interest rates while cautioning that this action could potentially lead to persistent inflation and undermine public trust in the U.S. central bank. On Thursday, a report from the U.S. Labor Department, delayed because of the federal government shutdown, disclosed that nonfarm payrolls for September increased by 119,000, greatly exceeding the expected rise of 50,000.
Meanwhile, U.S. factory activity fell to a four-month low in November, as tariffs raised import prices, which in turn limited demand. The probability of a Federal Reserve rate cut next month dropped to 69% on Monday, down from 74% in the previous session, according to the reports. Expectations for rate cuts rose to 74% from 40% on Friday, fueled by the dovish comments made by New York Fed President John Williams. Gold, known for being a non-yielding asset, usually does well in situations where interest rates are low.
Other Federal Reserve members maintained a hawkish perspective, with Dallas Federal Reserve President Lorie Logan supporting the idea of keeping the policy rate at its current level “for a time,” while the Fed Presidents for Chicago and Cleveland warned on Thursday that additional rate cuts at this moment present a wide range of risks to the economy. Elsewhere, spot silver slipped 0.3% to $49.86 per ounce, platinum rose 1.1% to $1,527.25, and palladium added 0.7% to $1,384.18.