Gold falls for second session on higher dollar

Gold fell for a second session on Monday, hurt by a firmer dollar and increased risk appetite as markets expect the Federal Reserve to adopt a cautious approach to monetary policy easing under US President-elect Donald Trump’s administration.

Spot gold was down 0.8% at $2,661.92 per ounce as of 1245 GMT, after dropping around 1% earlier in the session. US gold futures fell 0.9% to $2,668.80.

A line chart titled “Spot gold price in USD per oz” that tracks the metric over time.

“Gold prices have declined primarily due to a stronger U.S. dollar, rising Treasury yields, and increased risk appetite in financial markets — a trend that has gained momentum since

Donald Trump’s victory in last week’s presidential election,” said Ricardo Evangelista, senior analyst at ActivTrades.

The dollar index rose 0.3% after posting a weekly gain last week, making gold less appealing for other currency holders. The S&P 500 on Friday closed with its biggest weekly percentage gain in a year.

Gold logged its worst week in more than five months as Trump’s victory raised the prospect of higher import tariffs, which could keep interest rates elevated.

“Trump being the president-elect has directly led to some paring in rate-cut expectations into 2025, with a potential ‘Red Wave’ translating to little resistance to his tax cuts and spending plans, coupled with his stance for more tariffs,” said IG market strategist Yeap Jun Rong.

“Overall, that may complicate the Fed’s fight against inflation and we may expect the Fed to be more cautious in its easing process ahead, suggesting upside pressures on yields and a stronger U.S. dollar, which could cap gold prices.”

Traders now see a 68% chance of a 25 basis-point Fed rate cut in December, versus around 83% chance before Trump’s victory.

Several Fed officials, including Chair Jerome Powell, are scheduled to speak this week. U.S. consumer and producer price index data, weekly jobless claims and retail sales figures are also due this week.

Spot silver fell 0.1% to $31.25 per ounce, platinum rose 0.6% to $974.55, and palladium shed 0.2% to $986.96.