Gold prices rose on Monday, November 18, after a sharp decline last week, but expectations of fewer U.S. interest rate cuts limited the pace of the recovery.
Spot gold rose 1.13% to $2,590.29 an ounce, after hitting a two-month low last week. Gold had seen its biggest weekly decline in more than three years on Friday. U.S. gold futures rose 1.05% to $2,597.20.
Strong dollar reduces gold's appeal
On the other hand, the US dollar continues to consolidate its gains, making gold more expensive for investors holding other currencies.
Strong U.S. economic data on inflation suggests a shift in the debate within the Federal Reserve about the pace and sustainability of interest rate cuts, as investors have lowered expectations for a rate cut at the U.S. central bank’s December meeting, Reuters reported.
The future of monetary policy
At least seven Fed officials are scheduled to speak this week, keeping investors on the lookout for fresh signals on the future of monetary policy.
It is worth noting that higher interest rates increase the opportunity cost of holding gold, which does not generate direct financial returns.
On the economic data front, reports on Friday showed that US retail sales rose more than expected in October, indicating a strong start for the US economy in the fourth quarter of the year.
