Gold prices declined on Monday as a firmer U.S. dollar and signs of easing trade tensions between Washington and Beijing reduced demand for the safe-haven metal. Investors are now awaiting key central bank meetings later this week for fresh monetary policy signals.
Spot gold dropped 0.7% to $4,082.77 per ounce as of 0158 GMT, while U.S. gold futures for December delivery slipped 1% to $4,095.80. The U.S. dollar strengthened to a two-week high against the yen, making gold more expensive for holders of other currencies.
On Sunday, senior U.S. and Chinese economic officials reached a preliminary framework for a trade deal, which Presidents Donald Trump and Xi Jinping are expected to review later this week.
“This potential trade deal between the U.S. and China really came out of the blue and has been a positive surprise for markets overall. The downside, however, is that it has dampened demand for gold,” said Kyle Rodda, analyst at Capital.com.
He added, “Market sentiment is stabilizing as much of the heat has come out. Gold continues to find support on expectations of loose fiscal and monetary policies. If that outlook holds, gold’s long-term uptrend should remain intact.”
The Federal Reserve is widely expected to cut interest rates by 0.25 percentage points at its meeting on Wednesday, following a weaker-than-expected inflation report last week. However, investors are now focusing on Fed Chair Jerome Powell’s forward guidance for clues about future policy moves.
Gold, a non-yielding asset, typically benefits in a low-interest-rate environment as it becomes more attractive relative to interest-bearing investments.
Meanwhile, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.52% to 1,046.93 metric tons on Friday, down from 1,052.37 tons a day earlier.
Among other precious metals, spot silver slipped 0.3% to $48.42 per ounce, platinum inched up 0.1% to $1,607.24, while palladium eased 0.2% to $1,426.06.
