Gold prices fell in early trading, Monday, in light of the rise in the dollar, while investors await a number of important central bank meetings and the release of US inflation data this week to reveal more clues about the path of interest rates.
Tim Waterer, chief market analyst at KCM Trade, said the strong job numbers on Friday reshaped expectations for the Federal Reserve next year, providing breathing space for the dollar and bond yields and putting some downward pressure on gold.
The dollar rose 0.1 percent against competing currencies, making gold more expensive for holders of other currencies.
The data showed that non-farm jobs in the United States increased by 199,000 last month, which is higher than economists’ expectations of 180,000 jobs. The report prompted traders to reduce expectations that the US Federal Reserve may cut interest rates in March.
Traders will closely follow the November US consumer price report for further evidence on interest rates ahead of the Federal Reserve's statement and Chairman Jerome Powell's comments on Wednesday.
The US Central Bank is widely expected to leave interest rates unchanged at a range of 5.25 percent to 5.50 percent this week. The European Central Bank, the Bank of England, the Bank of Norway and the Swiss National Bank will also hold their monetary policy meetings on Thursday.
Goldman Sachs expects the US Central Bank to cut interest rates for the first time in the third quarter of next year, earlier than its previous expectations for the fourth quarter, citing improved inflation data.
Low interest rates would support gold, which does not generate a return.
Change in prices
Gold in spot transactions fell 0.3 percent, reaching $1,997.16 per ounce, by 0514 GMT, while US gold futures fell 0.1 percent to $2,013.20.
Regarding other precious metals, silver fell in spot transactions 0.1 percent to $22.94 per ounce, while platinum settled at $914.27 and palladium fell 0.9 percent to $938.68 per ounce.
