Pedro Goncalves writes:
Gold prices extended their decline to a third consecutive session on Monday, weighed down by a firmer US dollar and uncertainty over the Federal Reserve’s interest rate trajectory.
Gold futures lost 0.5% to $4,058.60 per ounce, while spot gold slipped 0.1% to $4,063.23 an ounce at the time of writing. The moves came as market participants scaled back their expectations for a shift in US monetary policy.
According to the CME FedWatch Tool, the probability of a rate cut at the Fed’s meeting next month eased to 69% on Monday, down from 74% in the previous session. The sharp rise in expectations late last week, from 40% to 74%, had followed dovish comments from New York Fed president John Williams. But other policymakers have struck a more cautious tone.
Dallas Fed president Lorie Logan reiterated the need to leave policy steady “for a time”, while the Chicago and Cleveland Fed presidents warned that cutting rates too soon could pose risks to the economy. The contrasting messages have kept investors on edge, weighing on non-yielding assets such as gold.
“Next three to five weeks will see a flattish to negative undertone in gold as there is no major significant support coming for the bulls in the absence of geopolitical tensions,” Jigar Trivedi, senior research analyst at Reliance Securities, told Reuters.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, was near a six-month high at 100.15, making dollar-priced gold more expensive for holders of other currencies.
“The dollar index is up near six-month highs, it’s above 100 and if it continues to trade above 100, then there will be further pressure on gold prices,” said Trivedi.
Despite the signs of a fading rally, Bank of America expects gold’s exceptional performance to continue well into 2026, arguing that the macroeconomic backdrop that propelled the metal to repeated record highs this year remains largely unchanged.
Assuming those conditions persist, BofA argues that bullion could climb to $5,000 an ounce in 2026. The bank cautions, however, that a materially more hawkish Federal Reserve remains the principal risk to its bullish outlook.