U.S. gold futures were down 0.55%, almost offsetting yesterday's increase (+0.70%). The correction was caused by partial profit-taking and low trading activity. Meanwhile, since the beginning of the week, gold has fallen by 0.22%, continuing last week's decline (-1.15%).
Experts said that despite the recent decline in prices, demand for gold, considered as a safe haven asset, remains elevated amid the Russian-Ukrainian war and events in Gaza.
However, the rise in gold prices is limited by the dynamics of the US currency. 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) has grown by 2.25% since early December and is preparing to record the third monthly increase in a row. A stronger dollar makes bullion more expensive for other currency holders.
Gold has gained 28% so far this year amid easing of the Fed's monetary policy and increased geopolitical tensions. Last week, the Fed cut interest rates again, but Fed Chairman Jerome Powell said that the Central Bank "will be careful about further rate cuts." In addition, economists believe that Trump's looser regulations, tax cuts, tariff hikes and tougher immigration policies will boost both growth and inflation. According to the CME FedWatch Tool, markets see a 10.7% probability of a 0.25% rate cut in January (compared to 8.6% a week ago), while the probability of an additional rate cut in March is 43.7%.