Gold dips as dollar firms, investors weigh US rate outlook

Gold prices dropped for a third consecutive session on Monday, as the dollar firmed near six-month highs, while investors awaited more clarity on the US interest rate trajectory.

Spot gold was down 0.4% at $4,045.58 per ounce, as of 0536 GMT.

US gold futures for December delivery fell 0.9% to $4,042.50 per ounce.

“The dollar index is up near six-month highs, it’s above 100 and if it continues to trade above 100, then there will be further pressure on gold prices,” said Jigar Trivedi, senior research analyst at brokerage Reliance Securities.

The dollar held near the six-month highs hit on Friday, making greenback-priced gold more expensive for holders of other currencies.

The probability of a Fed rate cut next month inched down to 69% on Monday, after jumping to 74% in the previous session, according to the CME FedWatch Tool.

Bets of rate cuts had surged to 74% from 40% on Friday following dovish comments from New York Fed President John Williams.

Other Fed members maintained a hawkish stance, with Dallas Federal Reserve President Lorie Logan calling for leaving the policy rate on hold “for a time” while Fed presidents for Chicago and Cleveland both warned that cutting rates further right now carries a wide range of risks for the economy. Gold, a non-yielding asset, tends to do well in low-interest-rate environments.

“Next three to five weeks will see a flattish to negative undertone in gold as there is no major significant support coming for the bulls in the absence of geopolitical tensions,” Trivedi added.

The US and Ukraine were set to continue work on Monday on a plan to end the war with Russia after agreeing to modify an earlier proposal that was widely seen as too favorable to Moscow.

Elsewhere, spot silver was down 0.1% at $49.95 per ounce, platinum rose 1.5% to $1,533.85, and palladium added 1.3% to $1,391.26.