Gold Prices Decline Amid Stronger Dollar and Holiday-Thinned Trading

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Gold prices fell on Monday as a stronger U.S. dollar and thin trading conditions due to public holidays in the U.S. and Asia combined to weigh on bullion. Spot gold dropped 0.7% to $5,007.70 per ounce, while U.S. gold futures declined 0.4% to $5,027.90 per ounce. The precious metal has been consolidating around the $5,000 level as investors await clearer economic signals, with mixed U.S. data and shifting expectations around Federal Reserve policy adding to the cautious tone.

Why it matters

Gold's performance is closely tied to interest rate expectations and currency movements, as the metal does not yield interest and is priced in dollars. The current market dynamics, including the impact of holiday-thinned trading and a stronger greenback, highlight the sensitivity of gold prices to short-term factors and the need for investors to closely monitor the evolving macroeconomic landscape.

The details

The decline in gold prices was exacerbated by thin trading conditions, as major financial markets in the U.S. and parts of Asia were closed for public holidays. With fewer participants active in the market, price movements became more susceptible to currency fluctuations and short-term positioning. The U.S. dollar edged higher during the session, adding downward pressure on bullion, as a stronger greenback makes the metal more expensive for holders of other currencies.

• U.S. markets remained shut for Presidents' Day on Monday.
• China and several other Asian countries were closed for the Lunar New Year celebrations.

What they’re saying

What’s next

Market participants now widely expect the Federal Reserve to leave interest rates unchanged at its next policy meeting scheduled for March 18.