Gold prices retreated from a two-week high on Monday as the US dollar strengthened, despite growing expectations of an interest rate cut by the Federal Reserve following Chairman Jerome Powell’s shift towards monetary easing last week. Spot gold fell 0.1% to $3,367.86 an ounce after reaching its highest since August 11 on Friday. US December gold futures declined 0.2% to $3,412.50. The US dollar index rose 0.1% against major currencies after hitting a four-week low, reducing gold’s appeal to foreign buyers. Analysts note support around $3,350 for gold in the near term, but sustained gains depend on lower inflation and weaker employment data. Powell indicated a possible rate cut in the upcoming Fed meeting but stressed inflation risks remain. Markets price an 87% chance of a quarter-point rate cut in September and a cumulative 48 basis points reduction by year-end. Gold typically benefits from low interest rates, which reduce the opportunity cost of holding non-yielding bullion.

Meanwhile, Gulf and Asian stock markets rose, buoyed by expectations of Fed easing. Industrial metals like copper and nickel also gained on hopes that rate cuts will stimulate economic growth. Investors await US personal consumption expenditure data expected to show core inflation rising to 2.9%, the highest since late 2023.