Spot gold declined 0.5 per cent to $2,671.49 per ounce and U.S. gold futures dropped 0.6 per cent to $2,678.50
Gold prices dropped on Monday for a second straight session as investors awaited U.S. economic data and comments from Fed officials this week for more clarity on the future direction of U.S. interest rates.
Spot gold declined 0.5 per cent to $2,671.49 per ounce, as of 0457 GMT. U.S. gold futures dropped 0.6 per cent to $2,678.50.
Gold prices were previously seen as a hedge against U.S. political risks, and a quicker-than-expected conclusion in the elections may be a trigger for some near-term unwinding, along with the stronger U.S. dollar, said IG market strategist Yeap Jun Rong.
The dollar index was a fraction stronger, after adding 0.6 per cent last week mainly against the euro. A stronger dollar makes gold less appealing for other currency holders.
Gold prices registered their worst week in more than five months on Friday as Donald Trump’s victory in the U.S. presidential election has raised the prospect of higher tariffs, which could keep interest rates higher.
We may expect the Federal Reserve to be more cautious in its easing process ahead, which could cap gold prices, Yeap added.
Bullion is considered a hedge against inflation, but higher interest rates raise the opportunity cost of holding it.
Several Fed officials, including Chair Jerome Powell, are scheduled to speak this week. Also, U.S. consumer and PPI data, weekly jobless claims and retail sales numbers are due this week.
Traders see a 65 per cent probability of another 25 bp Fed rate cut in December and a 35 per cent probability of no change, as per the CME Fedwatch tool.
