Gold prices moved down a little on Monday. This drop continued the weakness seen last week because traders are now less sure that the US Federal Reserve will cut interest rates next month. By around midday in global trading, spot gold was a bit lower and gold futures also showed a small fall.
Gold has been under pressure for weeks. It has dropped more than three percent over the last month. The main reason is the stronger US dollar. A stronger dollar usually makes gold less attractive. Traders are also nervous because they think rate cuts might be delayed and the overall economic outlook still feels shaky.
Earlier this month many people thought the Fed would cut rates soon. The chances were above sixty percent. Now the market sees only a little over forty percent chance of a small rate cut next month. This change happened because the US economy feels uncertain, especially after the country faced the longest government shutdown in its history.
For weeks there was hardly any new official economic data because the government was not working. That shutdown ended only recently. Now everyone is waiting for fresh numbers on jobs and inflation. One of the most important reports this week will be the September jobs data, which is expected on Thursday. There are hints from the White House that the October numbers might be shorter than usual because of the shutdown.
The Fed cut rates in its last two meetings. But many traders now think the Fed may hold rates steady next month. The central bank has been working without recent data, and that makes decision making much harder.
When interest rates stay high, gold usually struggles. Gold does not pay any interest, so higher rates make it less appealing compared to other assets. Other precious metals also slipped a little. Platinum moved lower and silver stayed almost unchanged after falling sharply last week.
The US dollar firmed slightly on Monday. This week will bring more key updates from the US economy. The nonfarm payrolls report for September arrives on Thursday. Fresh purchasing managers index numbers for November are also coming. The Fed’s meeting minutes from October will be released on Wednesday, which may give a better idea of what the Fed is thinking ahead of December.
Inflation and jobs remain the two main things the Fed watches when deciding interest rates. But there is still a chance that some October data may not be published at all because of the shutdown.