Gold prices extend decline as US dollar gains ground

Spot gold prices dropped by 1.1%, falling to $2,593 from a previous close of $2,620, extending the decline initiated after the U.S. elections. This recent price movement marks the largest drop in both dollar terms and percentage since June 2021, with gold now at its lowest level in two months, according to Dow Jones Market Data.

USD Index keeps steady

The U.S. dollar index has shown a sustained upward trend following the election results, with the U.S. dollar currently positioned at 105.605, reflecting a 0.3% daily increase. Last week, the index climbed more than 1.5% to reach 105.44, fueled by market reactions to the victory announcement. The rising dollar continues to put pressure on gold, as investors pivot toward the currency as a secure asset.

FED tends to cut interest, investors awaits

Market focus is now shifting to the Federal Reserve’s upcoming decisions. According to the FedWatch tool, there is a 68.5% probability of a 0.25% rate cut in December, while the likelihood of maintaining current rates stands at 31.5%.

The Consumer Price Index will be released on Wednesday, with Federal Reserve Chair Jerome Powell also expected to address inflation challenges and potential shifts in U.S. interest rate policy.

In addition to President Trump’s commitment to high tariffs—a factor seen as bolstering confidence in the U.S. dollar—global markets set sight on the Federal Reserve’s forthcoming inflation report this week and interest rate decision on Dec. 18, implementing a critical step in determining the dollar’s trajectory and gold’s future performance.