Dollar Strength Weighs on Gold Prices – Investors Await Fed Decisions

The price of gold declined at the start of the week as the strengthened US dollar currently diminished the appeal of the precious metal for investors using other currencies. This development occurred during a period when investors are preparing for new indications regarding the Federal Reserve's (Fed) interest rate policy. Current figures show a decrease of 0.2 percent to $2,651.99 per ounce, following a one percent increase in the previous session. US gold futures also recorded a decline of 0.3 percent to $2,669.20. The dollar index rose by 0.1 percent, keeping it near a two-month high. A higher dollar value makes gold less attractive to investors in other currencies, explained Tim Waterer, chief market analyst at KCM Trade. The stronger dollar is also a result of tempered expectations regarding further interest rate cuts by the Fed. Currently, there is about an 89 percent probability that the Fed will cut rates by 25 basis points in November. Conversely, about 11 percent of analysts see the possibility of the current rate remaining unchanged. Market participants are particularly focused on the statements from Fed officials throughout the week to gain more precise insights on the interest rate environment. US retail sales are also being closely monitored. In China, the government announced a significant increase in national debt to stimulate the currently sluggish economy, although it did not provide specific details on the potential measures. Additionally, newly released statistics indicated that both the consumer price inflation unexpectedly decreased and the deflation in producer prices increased. Further movements in precious metals are also being observed: silver and platinum lost 1.3 percent and 1.2 percent, respectively. Palladium continued its decline with a 1.6 percent drop.