Investing.com – Gold prices fell slightly on Monday and continued to fall after heavy losses last week due to the Federal Reserve’s more hawkish stance.
At 08:40 ET (13:40 GMT), the price was 0.1% lower at $2,618.31 per ounce, and the February maturity was down 0.5% at $2,632.09 per ounce.
The yellow metal lost 1% last week after Fed officials forecast fewer rate cuts in 2025 due to persistent inflation. This aggressive stance had strengthened the US dollar and created downward pressure on gold prices.
Gold Prices Remain Under Pressure After Fed Meeting, Markets Pivot on PCE Data
Gold prices hit a one-month low on Wednesday after markets lowered their expectations for the number of Fed rate cuts in 2025.
Markets now expect the first cut of 2025 to take place in June, and are pricing in roughly two cuts for the coming year.
Higher interest rates put downward pressure on gold because the opportunity cost of holding gold increases, making it less attractive compared to interest-bearing assets such as bonds.
U.S. data released Friday showed that the index – the Fed’s preferred inflation gauge – rose 0.1% in November, a slower pace than the 0.2% increase in October. This put annual PCE inflation at 2.4%, slightly below estimates of 2.5%.
However, annual growth in the economy, excluding volatile food and energy, remained at 2.8%, well above the central bank’s target of 2%.
Other precious metals were higher on Monday. rose 0.9% to $944.60 per ounce, while it rose 0.9% to $30.218 per ounce.
The dollar remains near a two-year high
The Fed’s aggressive shift provided renewed strength for the U.S. dollar as higher interest rates make the dollar more attractive due to higher yields on dollar-denominated assets.
The stock rose 0.6% on Monday, hovering near the two-year high it reached on Friday.
A stronger dollar often weighs on gold prices, as it makes the metal more expensive for buyers using other currencies.
Copper is rising due to soft US inflation, markets are waiting for Chinese stimulus measures
Among industrial metals, copper prices rose slightly on Monday after falling more than 1% last week, as softer inflation data in the US boosted sentiment.
The red metal was also under pressure from a strong dollar after the Fed meeting.
Markets are awaiting details on new stimulus measures in China as recent reports suggested Beijing will step up fiscal stimulus in the coming year. The country is the largest copper importer in the world.
The benchmark on the London Metal Exchange rose 0.1% to $8,960.50 per tonne, while rising 0.6 in one month to $4.1063 per pound.
(Peter Nurse contributed to this article.)
