FX.co ★ Gold Slips on Dollar Strength

Gold prices slipped toward $4,350 on Monday, weighed down by a stronger US dollar and profit-taking after last week’s rally, while investors kept a close eye on developments in the Middle East. On Friday, bullion hit its highest level in more than a week as declining oil prices helped ease worries about sustained inflationary pressures.

At the start of the week, oil prices extended their decline as markets looked for signs of diplomatic progress on the Iran conflict around this week’s UN meetings. However, tensions remained elevated after Iran and the United States traded fresh threats on Sunday.

At the same time, expectations for further monetary tightening stayed high, with traders assigning an 88% probability to a US interest rate hike in December, according to the CME FedWatch Tool. Last week, both the Federal Reserve and the Bank of Japan raised interest rates and signaled the possibility of additional tightening, following a similar move by the European Central Bank earlier this month.