Gold prices edged lower Monday as a firmer U.S. dollar and reduced expectations for a September Federal Reserve rate cut weighed on the precious metal. At 07:55 ET (11:55 GMT), spot gold slipped 0.3% to $3,328.25 an ounce, while gold futures declined 0.4% to $3,369.62.
The drop comes as traders recalibrate their outlook on monetary policy. The minutes from the Fed’s late-July meeting revealed that most policymakers favored holding rates steady in the near term. This stance reinforced investor caution ahead of Chair Jerome Powell’s address at the Jackson Hole Symposium, where markets hope for fresh guidance on the trajectory of interest rates.
Despite the decline, some safe-haven demand remains. Renewed skepticism about progress in U.S.-led negotiations between Russia and Ukraine has kept investors cautious, limiting steeper losses in gold.
Rate Cut Bets Recede
The likelihood of a September rate cut has sharply narrowed. According to CME FedWatch, traders now assign a 73.1% chance of a 25-basis-point reduction, down from 92.2% just a week earlier. This retreat has bolstered the dollar, with the greenback on track to gain 0.9% this week.
Higher-for-longer interest rates present a persistent challenge for gold and other non-yielding assets. The opportunity cost of holding bullion grows as Treasury yields become more attractive, putting long-term pressure on the metal.
Key factors weighing on investor sentiment include:
- Fed Policy Stance: Minutes show broad support for holding rates steady.
- Economic Data: Inflation has eased slightly, but uncertainty remains.
- Trade Risks: Tariff-related impacts cited by Powell add to policy caution.
Markets Await Powell
Attention now centers on Powell’s Jackson Hole remarks. Investors will parse his comments for clues on whether moderating inflation and a cooling labor market could tip the Fed toward easing.
The central bank’s approach carries significant weight for global commodities. A hawkish tone could extend dollar strength and deepen gold’s retreat, while dovish signals may spark renewed buying.
Beyond gold, other metals also softened: spot platinum slipped 0.2% to $1,331.75/oz, silver fell 0.5% to $37.905/oz, and benchmark copper futures eased 0.1% to $9,737.35 a ton.
With gold poised for its second consecutive weekly decline, markets appear locked in a holding pattern—waiting for Powell’s words to determine whether bullion’s next move is a deeper slide or a swift rebound.