Gold prices dropped by 1% on Monday as market participants focused on upcoming talks between the United States and Russia over the Ukraine war, alongside U.S. inflation data for July, which may provide clearer insight into the Federal Reserve's interest rate outlook.
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Spot gold was priced at $3,363.31 per ounce as of 07:03 GMT, after reaching its highest level since July 23 on Friday.
U.S. December gold futures fell 2% to $3,423.10.
Matt Simpson, chief analyst at City Index, said, “The easing of geopolitical tensions surrounding the Ukraine war pushed gold lower following Friday’s announcement of a planned meeting between U.S. President Donald Trump and Russian President Vladimir Putin on American soil.”
Trump had announced on Friday he would meet Putin on August 15 in Alaska to negotiate an end to the war.
Meanwhile, U.S. Consumer Price Index data will be released Tuesday, with analysts expecting that recent tariffs will raise the core inflation rate by 0.3%, pushing the annual pace to 3%, above the Fed’s 2% target.
Simpson added, “A higher inflation reading could boost the dollar and limit gold gains, although I believe support will generally hold as investors seek buying opportunities on dips.”
Additionally, a weaker-than-expected recent U.S. jobs report has fueled bets on a rate cut in September, with market expectations showing about a 90% chance of a cut, followed by at least one more before year-end.
As a non-yielding asset, gold typically benefits in a low interest rate environment.
Markets are also awaiting U.S.-China trade talks, with August 12 set by Trump as a deadline for a deal between Washington and Beijing.
Speculators on the COMEX exchange increased their net long positions in gold by 18,965 contracts to 161,811 contracts in the week ending August 5.
Technically, spot gold may break support at $3,364 per ounce and move toward a range between $3,314 and $3,342, according to Reuters technical analyst Wang Tao.
In other precious metals, spot silver fell 0.9% to $37.97 per ounce, platinum declined 1.3% to $1,314.75, and palladium dropped 0.1% to $1,125.
— Reuters
