Gold prices eased early on Monday, down 0.2% at $2,651.99 per ounce by 0252 GMT, retreating from a 1% rise in the prior session. U.S. gold futures followed suit, slipping 0.3% to $2,669.20 per ounce.
This decline comes amid a firmer dollar, which saw the U.S. dollar index rise by 0.1%, hovering close to the two-month high reached last week.
See also: Fed Mulls Policy as Inflation Softens
See: The U.S. dollar index steadily rising, closing at 102.76 with a high of 102.87 as seen on the VT Markets app.
The stronger dollar has become an obstacle for gold, making it more expensive for holders of other currencies. Market participants are now closely watching the Federal Reserve’s next steps.
FedWatch data suggests traders are pricing in an 89% probability of a 25 basis point rate cut at the Fed’s November meeting, with an 11% chance of no change in policy.
The unchanged U.S. producer price index in September reflects modest inflationary pressure, which leaves the market in suspense over how quickly the Fed may adjust its rate policy.
Gold, a zero-yielding asset, generally performs well when rates are low, as lower yields reduce the opportunity cost of holding bullion.
Attention also shifts to U.S. retail sales data later in the week, as traders seek confirmation of economic resilience. Comments from Federal Reserve officials will play a key role in shaping expectations for the November rate decision.
See also: Dollar Surges as Fed Outlook Stays Cautious
Precious metals followed gold lower, with spot silver dropping 1.3% to $31.1275 per ounce and platinum slipping 1.2% to $972.90, both halting two-session gains.
Palladium extended its decline, down 1.6% to $1,051.81 per ounce.
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