Gold extended its drop on Monday, giving back the remainder of Friday’s brief burst higher as traders shifted into wait-and-see mode ahead of Wednesday’s US interest rate decision.
The metal fell to $4,175 in early trade, its lowest level since last week’s lows, after touching $4,259 on Friday. By late afternoon, spot gold had steadied at $4,188 but remained pinned near the bottom of its recent range.
Confidence is building that the Federal Reserve will deliver a quarter-point cut, a view reinforced by the latest run of softer data.
A weak private-sector payroll print and fading labour-market momentum have strengthened the case for policy easing. The delayed core PCE index also offered little pushback, showing only a mild monthly increase and an annual rate that continues to drift lower.
Lower rates typically improve gold’s appeal by reducing the opportunity cost of holding a non-yielding asset, and a calmer dollar would normally add another tailwind.
But gains stayed constrained as traders pointed to the Fed’s recent mixed messaging. Several policymakers have cautioned against easing too early, injecting a layer of uncertainty that keeps the risk of an unexpected stance alive going into Wednesday.
Markets now turn to the rate decision and Jerome Powell’s press conference for clarity on whether the easing cycle is finally underway. Until then, gold looks content to linger near the floor of its range.