Gold prices fell by 0.4% as rising U.S. bond yields offset support from the negative dynamics of the U.S. currency. Investors are also adjusting their positions ahead of the release of US economic data, which will help assess the Fed's position on rate cuts.
The yield on 10-year US Treasury bonds rose 2.3 basis points to 4.618%, while 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 0.30% to 108.62.
This week, investors will focus on the minutes of the December Fed meeting, job openings data, ADP employment numbers and the nonfarm payrolls report, which will clarify the trajectory of the Fed's monetary policy this year. According to the CME FedWatch Tool, markets see a 9.1% probability of a 0.25% rate cut in January (compared to 11.8% a week ago), while the probability of an additional rate cut in March is 41.8%. Meanwhile, Goldman Sachs pushed back its gold price forecast of $3,000 per troy ounce to the second quarter of 2026 from December 2025, citing fewer Fed rate cuts.
Investors are also preparing for Donald Trump's inauguration (January 20), while economists expect that his tariff and protectionist policies will increase inflationary pressures, which will slow down the process of easing the Fed's monetary policy. Bullion is considered a hedge against inflation and uncertainty but high rates reduce the non-yielding asset's appeal.