Gold prices fell on Monday as bets strengthened for a U.S. rate cut in November after a surprisingly strong jobs report, while market participants await inflation data and comments from Federal Reserve officials for other clues.
Spot gold was down 0.2% at $2,647.43 an ounce by 0211 GMT. US gold futures were unchanged at $2,666.80.
The stronger-than-expected September jobs report released on Friday put a damper on expectations of a bigger Fed rate cut next month, boosting the dollar. [USD/]
Traders now see a 93.4% chance the Fed will cut interest rates by just a quarter of a percentage point in November, according to CME’s FedWatch tool. They lowered expectations for a 50 basis point cut to 0% from 28%.
“Geopolitical risks in the Middle East could support safe havens for the yellow metal, limiting downside risks to market rates,” said Yeap Jun Rong, market strategist at IG, adding that gold will continue to be supported by uncertainties linked to the US election.
Bullion tends to be a preferred investment in a low interest rate environment and times of political and economic uncertainty.
This week, market participants will focus on the minutes from the Fed’s latest monetary policy meeting, as well as data on the consumer price index (CPI) and consumer price index production (IPP) in the US. Several US central bank officials will also speak this week.
In the Middle East, Israel bombed Hezbollah targets in Lebanon and the Gaza Strip on Sunday ahead of the one-year anniversary of the Oct. 7 attacks that sparked the war, as Israel’s defense minister said all options were open for retaliation against archenemy Iran.
Separately, China’s gold holdings stood at 72.8 million ounces of fine gold at the end of September, for the fifth straight month, the data showed.
Spot silver was steady at $32.17 an ounce. Platinum rose 0.5% to $989.36 and palladium rose 1% to $1,022.20.