Gold declines despite weakening dollar and anticipation of key federal reserve data

Shafaq News / Gold prices fell on Monday as traders dialed back expectations for rapid interest rate cuts, while improved risk sentiment ahead of key U.S. economic data and major central bank policy meetings this week also weighed on the safe-haven asset.

Spot gold was down 0.4% at $2,022.28 per ounce, as of 0639 GMT.

U.S. gold futures fell 0.3% to $2,023.80.

Gold prices seem to be capped by lower expectations for the Fed's rate cut in March. Still, geopolitical uncertainty in the Middle East - especially around the Red Sea route - has kept gold supported above $2,015, said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.

Japanese shares led U.S. and European futures higher on Monday as AI hype juiced up the tech sector ahead of a week brimming with central bank meetings, major economic data, and corporate earnings.

Other safe-haven assets weakened, with the U.S. dollar index falling 0.1% to nearly a week low, while yields on benchmark U.S. 10-year Treasury notes slipped from a more than a month high to 4.1148%.

Bullion fell about 1% last week - its biggest weekly decline in six - after Fed officials said it needs more inflation data in hand before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.

Traders priced in 132 basis points (bps) of rate cuts for this year, down from 150 bps two weeks ago, according to LSEG's interest-rate probability app IRPR.

The Bank of Japan is expected to keep policy super-easy at a meeting on Tuesday. Investors will be watching out for the U.S. flash PMI report on Wednesday, fourth-quarter advance GDP estimates due on Thursday and personal consumption expenditures data on Friday.

Higher interest rates increase the opportunity cost of holding bullion.

Spot silver fell 1.9% to $22.18 per ounce, platinum lost 0.3% to $896.27, and palladium slipped 0.8% to $938.70.