(Bloomberg) -- Gold fell as the dollar strengthened against other currencies, while investors looked ahead to key US data due on Friday that may offer clues on the Federal Reserve’s next interest-rate move later this month.
Bullion traded around $2,630 an ounce in early Asia hours on Monday after declining almost 3% last week. The dollar gained against the euro as political tensions flared in France, while the yen retreated as US Treasury yields tracked higher. A stronger greenback makes the precious metal more expensive for buyers in other currencies, while higher yields tend to weigh on gold as it doesn’t pay interest.
Gold’s losses last week were driven by reduced haven appetite following a US-brokered cease-fire deal between Israel and Hezbollah that came into effect mid-week. Still, fears about an escalation in Russia’s war on Ukraine continue to support demand for safe assets such as gold.
Markets are preparing for US nonfarm payrolls figures later this week, which may influence the Fed’s interest-rate decision on Dec. 18. Markets are pricing in about a 70% chance that the US central bank will slash benchmark borrowing costs by a quarter point. Lower borrowing costs typically benefits gold, as it doesn’t pay interest.
The precious metal is up about 30% so far this year, with gains supported by the US Fed’s monetary easing cycle, central-bank purchases and heightened geopolitical and economic risks. Some analysts expect fresh records in 2025, with Goldman Sachs Group Inc. and UBS Group AG both issuing bullish outlooks last month.
Spot gold was down 0.4% to $2,632.22 an ounce as of 10:36 a.m. in Singapore. The Bloomberg Dollar Spot Index was up 0.4%. Silver, platinum and palladium all declined.
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