Gold prices fell in the European market on Monday, extending losses for the third consecutive session and moving away from a three-week high, as corrective moves and profit-taking continued, while the U.S. dollar’s strength in the foreign-exchange market added further downward pressure.

Recent comments from several Federal Reserve officials were more hawkish than markets expected and showed caution toward further monetary easing, which pushed down expectations for a U.S. rate cut in December.

Price Overview

Gold prices fell 0.85% to 4,049.72 dollars, from the opening level of 4,083.56 dollars, and recorded a high of 4,106.90 dollars.

At Friday’s settlement, gold prices lost 2.1%, marking a second straight daily decline as corrective moves and profit-taking continued from the three-week high at 4,245.13 dollars per ounce.

The precious metal posted a 2.2% gain last week, its first weekly advance in a month, supported by improved safe-haven demand and weakness in the U.S. dollar.

U.S. Dollar

The U.S. dollar index rose 0.2% on Monday, extending gains for the second straight session as it continued recovering from two-week lows, reflecting ongoing strength against a basket of global currencies.

This rebound comes amid growing demand for the dollar as the best available investment in the foreign-exchange market, especially as expectations for a Federal Reserve rate cut at the December meeting decline.

U.S. Interest Rates

Over the past week, and contrary to prevailing market expectations, a growing number of Federal Reserve policymakers expressed caution regarding further easing.

Following those remarks, and according to the CME FedWatch tool, market pricing for a 25-basis-point rate cut in December declined from 67% to 43%, while pricing for no change increased from 33% to 57%.

To reassess those expectations, investors are closely monitoring comments from Federal Reserve officials, along with the anticipated resumption of government economic data releases this week.

Gold Outlook

Tim Waterer, chief market analyst at KCM Trade, said the Fed’s rate-cut expectations for next month are effectively restraining gold’s performance from a yield perspective.

Waterer added that despite the end of the government shutdown, there is no guarantee that markets—or even the Federal Reserve—have a full picture of economic conditions, noting that the hawkish tone from Fed officials does not help gold in any way.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by about 4.93 metric tons on Friday, bringing the total to 1,044 metric tons, down from 1,048.93 metric tons—the highest level since October 22.

The euro fell in the European market on Monday against a basket of major currencies, extending losses for the second consecutive day against the U.S. dollar and moving away from a two-week high, as corrective moves and profit-taking continued alongside a rebound in the U.S. currency supported by Federal Reserve officials.

Expectations for a European rate cut in December remain weak, despite some easing in inflationary pressures on European Central Bank policymakers, especially after recent data showed that inflation slowed in October.

Price Overview

The euro fell 0.25% against the dollar to 1.1595 dollars, from today’s opening level of 1.1623 dollars, and recorded a high of 1.1624 dollars.

The euro ended Friday’s session down 0.1% against the dollar, marking its first decline in four days, after hitting a two-week high the previous day at 1.1656 dollars.

The euro posted a 0.5% gain against the dollar last week, its second straight weekly rise, driven by concerns over a U.S. economic slowdown amid the longest federal government shutdown.

U.S. Dollar

The U.S. dollar index rose 0.2% on Monday, extending gains for the second straight session, as the currency continued to recover from two-week lows, reflecting ongoing strength against major and minor peers.

Recent comments from several Federal Reserve officials were more hawkish than markets expected, pushing down the probability of a U.S. rate cut in December to around 40%, compared with a steady 95% a month ago.

European Interest Rates

Money-market pricing for a 25-basis-point European Central Bank rate cut in December is currently stable around 25%.

To reassess those expectations, investors are awaiting several economic releases in Europe, in addition to monitoring comments from ECB officials.

The Japanese yen fell in the Asian market on Monday against a basket of major currencies, extending losses for the second straight day against the U.S. dollar and moving closer to touching a nine-month low, after data showed that Japan’s economy contracted in the third quarter of this year due to U.S. tariffs.

The data reinforces Prime Minister Sanae Takaichi’s inclination to use expansionary fiscal policies to support the country’s weak economic activity, reducing the likelihood of a Japanese interest-rate hike in December.

Price Overview

The dollar rose about 0.2% against the yen to 154.79¥, from today’s opening level of 154.52¥, and recorded a low of 154.37¥.

The yen ended Friday’s session down by less than 0.1% against the dollar, resuming losses that had paused the previous day in an attempt to recover from a nine-month low at 155.04.

The yen lost about 0.75% against the dollar last week, marking its third weekly decline in a month amid negative pressure following recent remarks by Prime Minister Sanae Takaichi.

Japan’s Economy

Preliminary GDP data showed that Japan’s economy contracted by 0.4% in the third quarter of this year, better than market expectations of a 0.6% contraction, after recording 0.5% growth in the second quarter.

This marks the first contraction in six quarters, driven by the hit to Japanese exports from U.S. tariffs, further strengthening Takaichi’s stance toward using fiscal stimulus to support the country’s weak economic activity.

Takaichi announced last week that she would work on drafting a new multi-year fiscal target to allow more flexibility in spending, a shift that could weaken Japan’s commitment to consolidating its public finances.

She also renewed calls for the Bank of Japan to exercise caution and slow the pace of rate hikes, stressing the need to balance supporting economic growth with maintaining price stability.

Analysts believe Takaichi’s remarks may pave the way for a new phase of expansionary fiscal policy to support growth, but they also place additional pressure on the Bank of Japan as it faces challenges in coordinating monetary policy with a less restrictive fiscal stance.

Japanese Interest Rates

Following the above data, market pricing for a 25-basis-point rate hike by the Bank of Japan in the December meeting dropped from 45% to 35%.

To reassess those expectations, investors are awaiting further data on inflation, unemployment, and wage levels in Japan.

Most cryptocurrencies fell during Friday’s trading, led by Bitcoin, which has officially entered bear-market territory following heavy selling and uncertainty over U.S. monetary policy.

Bitcoin reached 94,491.22 dollars earlier today, leaving the digital asset down more than 23% from its last record high in early October at 126,000 dollars, thereby entering a bear market.

According to data compiled by Bloomberg, U.S.-listed exchange-traded funds investing in Bitcoin saw net outflows of about 870 million dollars on Thursday, signaling waning institutional confidence.

Speculation and uncertainty surrounding Federal Reserve policy returned to the forefront as concerns grew over the expected size of the rate cut at the upcoming December meeting.

According to the CME FedWatch tool, the probability of a 25-basis-point rate cut in December declined to 53.6% from 94.4% a month ago, while the probability of no change rose to 46.4% from 5.5%.

In the same context, Jeffrey Schmid, president of the Kansas City Federal Reserve Bank, said Friday that his concerns about inflation—describing it as “far too hot”—far outweigh the narrower effects of tariffs, in new remarks suggesting he may oppose cuts again at the December meeting if policymakers decide to lower short-term borrowing costs.

Early Thursday morning, the U.S. House of Representatives voted in favor of the temporary funding bill, which was then signed by President Donald Trump, immediately ending the government shutdown that had lasted from early October until Wednesday.

Ethereum

In market trading, Ethereum rose 0.2% to 3,205.8 dollars on CoinMarketCap as of 20:00 GMT.

Bitcoin

Bitcoin fell by nearly 3% to 95,700 dollars.