CNBC_ Gold prices declined on Monday, weighed down by a stronger US dollar and rising US Treasury yields, while investors await the US Federal Reserve meeting scheduled for next week, amid expectations that interest rates will be kept unchanged.
Spot gold fell 0.5% to $4,143.91 per ounce.
US gold futures for December delivery decreased 0.4% to $4,163.30 per ounce.
The US dollar posted slight gains, making dollar-denominated gold more expensive for holders of other currencies, while 10-year US Treasury yields rose by 0.6%.
Tim Waterer, market analyst at KCM Trade, stated in a note cited by Reuters that gold is recording a slight increase at the beginning of the week, as the metal responds positively to the weak trend in oil prices from an inflation perspective.
He added that a more sustained drop in oil prices or a clearer decline in yields would be among the most supportive factors for gold in the near term, as both would ease inflation and interest rate concerns.
Oil prices dropped on Monday after US President Donald Trump exempted Russia from sanctions and tariffs, which could lead to an increase in Russian fuel exports.
Meanwhile, US import prices rose more than expected in September, driven by higher costs for energy products and a range of other goods, offering fresh evidence of escalating inflationary pressures amid the ongoing conflict in the region.
Market participants are awaiting the Federal Open Market Committee (FOMC) meeting regarding US interest rates, as well as the Personal Consumption Expenditures (PCE) data scheduled for release next week. The US central bank monitors PCE price metrics to achieve its 2% inflation target.
CME Group's FedWatch tool indicates that traders are pricing in a 16% probability of a rate hike this month, and a 92% probability of an increase in December.
Although gold is considered a hedge against inflation, higher interest rates diminish the appeal of the non-yielding metal.
As for other precious metals, spot silver rose 0.4% to $57.24 per ounce, platinum gained 1% to $1,646 per ounce, and palladium increased 0.8% to $1,121.14 per ounce.
