Gold Slips Amid Quiet Markets and Profit-Taking

Gold prices declined on Monday as trading volumes were thin due to public holidays in the U.S. and China. The market was also influenced by traders booking profits after a recent price surge. Additionally, expectations of interest rate cuts later this year may affect future gold valuations.

Gold prices saw a decline on Monday, influenced by sparse trading volumes as markets in the U.S. and China were closed, coinciding with local public holidays. Investors also chose to book profits following a notable 2.5% rise in a recent session. As a result, spot gold decreased by 1.1% to $4,986.32 per ounce by 0550 GMT, while U.S. gold futures for April delivery fell 0.8% to $5,005.60 per ounce.

The drop in gold prices comes after spot gold had gained following U.S. consumer price inflation data, which showed a 0.2% rise in January. According to Tim Waterer, KCM's chief analyst, traders are taking a cautious approach due to the absence of new market-driving catalysts, coupled with the anticipation that the Federal Reserve may retain interest rates in their upcoming meeting.

Despite a high services inflation rate noted by Federal Reserve Bank of Chicago President Austan Goolsbee, market players expect a total of 75 basis points in rate reductions this year, potentially benefitting non-yielding assets like gold in low-interest-rate climates. Simultaneously, the U.S. military is preparing for possible prolonged operations against Iran, adding to geopolitical tensions that could further impact commodity markets.