Gold Prices Drop 2% Due to Stronger Dollar and Rates

Gold prices fell more than 2% on Monday, pressured by a stronger dollar and concerns over the fiscal policies expected under Donald Trump’s newly secured second term.

Spot gold dropped 2.3% to $2,666.48 per ounce, while U.S. gold futures fell 2.42% to $2,629.40 per ounce. The strengthening dollar made gold less attractive to buyers using other currencies, as the U.S. Dollar Index rose 0.5% to reach its highest level since early July. Last week, the index surged over 1.5% to 105.44 points following Trump’s election win.

The market’s focus has shifted to the broader implications of a “red wave,” with a high likelihood of new tariffs under Trump’s administration, driving up demand for the dollar. A stronger dollar has weighed on gold prices for the first time in months, also leading to speculation that the Federal Reserve might delay its rate-cutting cycle as inflation edges closer to its 2% target.

Gold posted its worst weekly performance in over five months following Trump’s re-election last Tuesday, raising fresh uncertainties for the Federal Reserve’s policy outlook.

In other precious metals, spot silver dropped 2.3% to $30.58 per ounce, platinum gained 0.5% to $973.15, and palladium edged down 0.1% to $987.63 per ounce.

Finally, in other commodities, oil prices fell more than 2% on Monday after China’s latest stimulus plan failed to meet investor expectations for boosting demand in the world’s second-largest oil consumer. At the same time, concerns over increased supply expected in 2025 added further pressure to prices.