Gold prices decline with the rise of the US dollar

Gold prices fell today, with the dollar rising after the precious metal recorded gains of more than two percent in the previous session, as lower-than-expected US inflation data led to increased expectations of a cut in interest rates by the Federal Reserve (the US central bank).

By 0111 GMT, the price of gold in spot transactions fell 0.4 percent to $5,020.10 per ounce, after rising 2.5 percent in the previous session.

US gold futures for April delivery fell 0.1 percent to $5,039.50 per ounce.

The dollar index rose today, which makes gold denominated in the US currency more expensive for holders of other currencies. The Labor Department said on Friday that the US consumer price index rose 0.2 percent in January, which was less than economists’ expectations for a 0.3 percent increase, after an unrevised 0.3 percent rise in December. Low inflation usually increases the chances of lowering interest rates.

According to data compiled by the London Stock Exchange Group, market participants currently expect an overall cut in interest rates of 75 basis points this year, with the first cut expected in July.

Non-yielding gold tends to rise in a low interest rate environment.

As for other precious metals, the price of silver in spot transactions fell 0.6 percent to $76.92 per ounce after rising three percent on Friday.

Platinum fell 0.4 percent to $2,054.35 an ounce. Palladium rose 0.4 percent to $1,692.23 per ounce.