Gold prices fall amid stronger dollar, uncertainty over timing of Fed rate reduction

(MENAFN) On Monday, gold prices experienced a decline, largely influenced by the strengthening of the US dollar, as investors awaited further indications regarding the timing of the US Federal Reserve's announcement of the first interest rate cut for the year. Spot gold transactions saw a decrease of 0.3 percent, settling at USD2,030.9 per ounce by 0100 GMT, while US gold futures followed suit with a 0.4 percent drop to USD2,040.6 per ounce.

The uptick in the dollar index by 0.1 percent exerted additional pressure on gold prices, rendering dollar-priced bullion more costly for foreign buyers. Last week, Federal Reserve Governor Christopher Waller's remarks that he was in "no rush" to implement interest rate cuts reinforced investor expectations that such measures would likely not materialize before June. However, dissenting views within the Federal Reserve persist, with another official expressing confidence that interest rate reductions are imminent later in the year, notwithstanding robust inflation and labor market indicators observed in January.

Minutes from the Fed's recent meeting revealed that while there is acknowledgment of potential benefits associated with interest rate cuts, most policymakers remain cautious about the risks of implementing such measures prematurely. Currently, market sentiment points to a 68 percent probability of an interest rate cut occurring in June, as indicated by the Federal Reserve's monitoring tool. The allure of holding non-yielding bullion is bolstered by the prospect of sustained low interest rates, adding to the complex dynamics shaping gold market trends amidst ongoing economic uncertainties.


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