Gold prices fell on Monday, pressured by a stronger dollar and signs of easing trade tensions between the United States and China, which dampened the precious metal's safe-haven appeal.
Meanwhile, investors are awaiting meetings of major central banks scheduled for later this week for clues on future monetary policy directions.
Possible trade deal surprises markets, weighs on the yellow metal
Sunday saw a surprising development when senior economic officials from China and the United States discussed the general framework of a trade agreement, which US President Donald Trump and his Chinese counterpart Xi Jinping are expected to finalize this week.
Analyst Kyle Rodda of Capital.com said that this potential agreement came unexpectedly and was a positive surprise for the markets as a whole, but the flip side of these developments was negative for gold.
Roda added that the market has lost much of the cautious momentum that dominated recent weeks, noting that sentiment is gradually balancing. He explained that the main reason gold remains relatively supported is the expectation that expansionary fiscal and monetary policies will continue in the future, which will maintain the precious metal's upward trend if the situation persists.
Cautious anticipation for the Federal Reserve meeting amid expectations of a rate cut
The US Federal Reserve is widely expected to cut interest rates by a quarter of a percentage point at its meeting next Wednesday, supported by weaker-than-expected inflation data last week.
While markets have already digested the impact of this anticipated cut, attention is now turning to Fed Chairman Jerome Powell's remarks to see if he will provide clues about the path of monetary policy in the coming months.
