Gold prices dipped as the dollar strengthened against other currencies, with investors turning their attention to upcoming US economic data, expected to shed light on the Federal Reserve’s potential interest rate decision later in the month. In early Asian trading on Monday, gold hovered around $2,630 per ounce, following a nearly 3% decline last week.

The dollar's rally, driven by political tensions in France and higher US Treasury yields, weighed on gold, which becomes costlier for holders of other currencies. Additionally, rising yields diminish gold’s appeal, as it does not generate interest.

Last week’s losses in gold stemmed partly from reduced demand for safe-haven assets after a US-mediated ceasefire between Israel and Hezbollah took effect mid-week. However, geopolitical risks, including concerns over Russia’s war in Ukraine, continued to support gold’s appeal as a hedge against uncertainty.

Markets are now focused on US nonfarm payroll data, which could influence the Fed’s decision on whether to cut interest rates by 25 basis points at its December 18 meeting. Lower rates typically favor gold, as they reduce the opportunity cost of holding the non-yielding asset. Gold has gained roughly 30% this year, supported by the Fed’s easing measures, strong central-bank purchases, and ongoing geopolitical and economic risks. Analysts, including Goldman Sachs and UBS, predict new highs for the metal in 2025.

As of mid-morning in Singapore, spot gold declined by 0.4% to $2,632.22 per ounce. Meanwhile, the Bloomberg Dollar Spot Index rose by 0.4%, and other precious metals, including silver, platinum, and palladium, also posted losses.

Paraphrasing text from "Bloomberg" all rights reserved by the original author.