The price of gold fell by about 1.7%, retreating from a 3-week high, which was caused by partial profit-taking after prices rose by 6.5% last week.
The further decline in gold was limited by the negative dynamics of the US currency and lower yields on US bonds. 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) fell by 0.53% to 106.99. Meanwhile, the yield on 10-year US Treasury bonds fell by 7.8 basis points, to 4.332%.
Market participants also continued to overestimate the prospects for the Fed's monetary policy. Some Fed policymakers last week expressed concern that inflation progress may have stalled, urging caution, while others stressed the need for further rate cuts. Later this week, the minutes of the Fed's November meeting, GDP data for the 3rd quarter, as well as the personal consumption expenditure price index (the Fed's preferred inflation indicator) for October will be presented, which may affect the pace and timing of the Fed's interest rate cuts. According to the CME FedWatch Tool, markets see a 56.2% probability of a 0.25% rate cut in December (compared to 58.7% a week ago). Experts said that less dovish signals from the Fed policymakers and stronger-than-expected inflation data could strengthen the arguments in favor of keeping rates at the current level in December, which, along with the prospect of slowing the pace of rate cuts, could put pressure on gold prices.