The price of gold fell by 0.85%, which was caused by the renewed strengthening of the US dollar. Market participants are also preparing for the publication of new US statistical data and speeches by Fed policymakers, which will help clarify the trajectory of the Central Bank's monetary policy.
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 0.51% to 106.28, making greenback-priced bullion more expensive for holders of other currencies. The dollar was supported by statements by Donald Trump, who warned BRICS emerging nations against trying to replace the greenback with any other currency.
Last month, gold prices fell 2.92% (the largest drop since September 2023), as Trump's election victory increased expectations of large budget expenditures, tariff increases and tighter borders. At the same time, higher tariffs may cause inflation to rise and force the Fed to take a cautious approach to further rate cuts. According to the CME FedWatch Tool, markets see a 67.1% probability of a 0.25% rate cut in December (compared to 52.3% a week ago), while the probability of an additional rate cut in January is only 15.8%. Non-yielding assets like bullion thrive in a lower interest rates environment and amid geopolitical uncertainties.
This week, the catalysts for gold will be US data (job openings report, ADP employment report and non-farm payrolls), as well as speeches from Fed officials, including Chair Jerome Powell.