Spot Gold pulled back from levels close to record high on Monday due to a firmer US Dollar and higher Treasury yields, as market players trimmed bets on aggressive monetary easing by the Federal Reserve.
Since the closely watched US PCE inflation has held stable in July, this reduced the need for a substantial Fed interest rate cut in September.
Markets are now pricing in about a 33% chance of a 50 basis point Fed rate cut this month, compared to 36% a week ago, and a 67% chance of a 25 basis point rate cut.
Still, markets continued to price in 100 basis points of Fed rate cuts by the end of this year.
Investors now await the key US Non-Farm Payrolls report due out on Friday for more insight into macroeconomic conditions.
Employers in all sectors of the US economy, excluding farming, probably added 163,000 job positions in August, according to market consensus, following a job growth of 114,000 in July.
“Should the U.S. economy add 150,000 jobs or more and the unemployment rate ease to 4.2% or below, it would increase confidence that the economy is on target for a soft landing,” IG analyst Tony Sycamore was quoted as saying by Reuters.
US markets will be closed for a public holiday on Monday, thus, larger moves are less likely.
As of 7:54 GMT on Monday Spot Gold was edging down 0.21% to trade at $2,498.15 per troy ounce.
The precious metal’s all-time high currently stands at $2,531.76 per troy ounce.
Gold Futures for delivery in December were up 0.10% on the day to trade at $2,530.05 per troy ounce.
The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was little changed at 101.601 on Monday. The DXY was holding near a two-week high of 101.799.
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