Gold Prices on the Decline: Trade Hopes and the Strengthening Dollar

Decrease in Gold Prices and Its Market Reflections

In the first trading day of the week, gold prices fell due to the strengthening of the dollar and signs of easing trade tensions between the US and China. Investors are focusing on the monetary policy signals that may come from important central bank meetings scheduled in the coming days.

Changes in Spot Gold and Futures Contract Prices

Spot gold, as of 07:57 Turkish time, decreased by %1.03 to 4,069.27 dollars/ounce, while December futures contracts for US gold also fell by %1 to 4,095.80 dollars. The dollar reached its highest level in the last two weeks, making gold more expensive for investors holding other currencies.

Trade Agreement Discussions and Their Impact on Markets

Over the past weekend, senior US and Chinese economic officials held significant discussions on the framework of a trade agreement expected to be finalized between country leaders Donald Trump and Xi Jinping. Capital.com analyst Kyle Rodda notes that while these developments created a positive atmosphere in the markets, they have negative implications for gold:

“The potential trade agreement between the US and China unexpectedly surfaced, creating a positive surprise for the market. However, this will have adverse effects on gold prices. The substantial reduction in market tensions invalidates expectations for loose fiscal and monetary policies that strongly supported gold.”

Fed's Interest Rate Decision and the Future of Gold

Furthermore, the US Federal Reserve is expected to lower interest rates by a quarter percentage point during its meeting on Wednesday. These expectations strengthened further with the inflation data released on Friday, which came in below forecasts. Although the interest rate cut is largely priced in, investors' focus will be on the forward-looking messages from Fed Chairman Jerome Powell. A low-interest-rate environment is generally seen as a supportive factor for gold, which typically yields no returns.