Gold prices continued to fall on Monday after hitting the highest level in 14 months on Friday, with the dollar hovering near two-week high ahead of the Federal Reserve monetary policy meeting this week.
The future contracts for the precious metal fell about 0.52 percent at $1,337.55 an ounce while in spot transactions it plunged 0.2 percent to $1,337.35 an ounce, as of 10:16 GMT.
Gold reached its highest level since April 2018 at $1,358.04 per ounce on Friday, but erased all the gains to close lower at $1341.40.
The dollar index extended its advance for a fourth straight session, hitting a high of 97.59, the highest since June 3, thereby denting the appeal of the shiny metal as an alternative investment.
The dollar got a boost from the U.S. retail sales on Friday, where the report managed to push interest rate cut expectations to 21.7% from 28.3% on Thursday, according to CME Group’s FedWatch tool.
The volume of retail sales soared 0.5 percent last month, while the previous reading was revised higher 0.3 percent increase from 0.2 percent drop. The upbeat report reflected the improvement in consumer spending in the second quarter.
The Fed's rate decision on Wednesday is expected to be the largest event that may weigh on gold’s movements in particular and financial markets in general.
While interest rate cuts are not expected, markets will be waiting for any comments from the Fed regarding raising interest rates in the coming months.
The negative impact of trade tensions between the United States and China, weak jobs report and mild inflation in the US economy could support a dovish stance from the Fed.
In the context Fed Chairman Jerome Powell said that the Fed will act "as appropriate" to address the risks posed by the trade dispute.
As for other precious metals, silver went down
about 0.20 percent at $14.773 per ounce, platinum fell about 1.42 percent at $794.05
and palladium slipped 0.5 percent to $1,462.45.