Gold Declines Ahead of U.S. Data That May Determine Interest Rate Direction

SadaNews Economy - Gold prices fell on Monday as investors await a series of U.S. economic data this week, which may provide a clearer view of the Federal Reserve’s interest rate path.

Gold fell in spot transactions to record $4059.40 per ounce. Meanwhile, December gold futures dropped about 0.5% to $4073.80 per ounce.

Tim Waterer, chief market analyst at KCM Trade, told Reuters, "The reduction in expectations for a Fed rate cut next month is constraining gold's performance from a yield perspective. Despite the end of the government shutdown, there are no guarantees that the markets, or even the Fed itself, have a complete view of how the economy is performing."

Market participants are waiting for a series of U.S. data this week, including the non-farm payroll report for September on Thursday, in search of additional indicators regarding the health of the world’s largest economy.

The U.S. Bureau of Economic Analysis announced on Friday that it is working on updating the economic data release schedule affected by the recent government shutdown.

Traders are currently pricing in a 46% chance of the Fed cutting interest rates by a quarter point next month, compared to 50% last week.

Amid concerns related to inflation and signs of relative stability in the labor market after two rate cuts this year, more policymakers at the Fed are hinting at their hesitation to proceed towards further monetary easing.

Gold, which does not yield any returns, typically performs better in a low-interest-rate environment and during periods of economic uncertainty.

Meanwhile, the dollar index maintained its strength against competing currencies, making gold less attractive to holders of other currencies.

The SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, noted that its holdings decreased by 0.47% to 1044.00 tons on Friday, compared to 1048.93 tons on Thursday.

In other precious metals, silver prices in spot transactions rose by 0.8% to $50.96 per ounce, platinum rose by 0.7% to $1552.36, while palladium increased by 1.7% to $1408.13.