Gold prices fell about 1.5% on Monday as a stronger US dollar and higher energy prices lowered hopes for near-term interest rate cuts.
Spot gold fell 1.5% to $5,091.02 per ounce at 0233 GMT, while US gold futures for April delivery dropped 1.2% to $5,097.40. The US dollar reached a three-month high, making gold more expensive for buyers using other currencies. At the same time, US 10-year Treasury yields climbed to a one-month high. This increased the cost of holding non-yielding assets like gold.
Tim Waterer, chief market analyst at KCM Trade, said gold remained under pressure. Triple-digit oil prices strengthened the dollar, raising inflation concerns and lowering expectations of interest rate cuts.
Crude oil prices surged more than 20% to above $110 per barrel, increasing inflation risks. Waterer said much of gold’s price rise over the past 12 months was based on expectations of lower US interest rates. However, the inflation risk from oil above $100 per barrel has weakened those expectations.
Investors now expect the US Federal Reserve to keep interest rates unchanged at the end of its two-day meeting on March 18, according to CME Group’s FedWatch tool. The probability of rates staying unchanged in June has risen to more than 51%, up from below 43% last week. Gold usually performs better in a low-interest-rate environment.
Among other metals, spot silver fell 1.5% to $83.09 per ounce. Spot platinum dropped 1.1% to $2,111.04, and palladium declined 1.4% to $1,603.25.
