The price of gold fell by 0.7%, continuing Friday's decline. Pressure on prices is exerted by the positive dynamics of the US currency, as well as a correction in the position of investors ahead of the publication of US economic data and speeches by Fed policymakers.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.29% to 105.30. A stronger dollar makes bullion more expensive for overseas buyers.
Gold prices fell 1.98% last week, recording the largest drop in more than five months, as news of Donald Trump's victory increased the likelihood of higher tariffs that could keep the Fed's interest rates high. Bullion is considered a hedge against inflation but higher rates raise the opportunity cost of holding it. Overall, experts expect the Fed to be more cautious in its easing process ahead, which could cap gold prices. According to the CME FedWatch Tool, markets see a 64.9% probability of a 0.25% rate cut in December (compared to 79.6% a week earlier).
This week, investors will analyze the statements of many Fed policymakers, as well as US inflation data, which will help clarify the future direction of the Fed's monetary policy.