The U.S. dollar index rose 0.5% on Monday, its best daily performance in a week, and the price of gold rose for holders of other currencies. Market sentiment was influenced by President-elect Donald Trump's comments urging BRICS countries to abandon plans for an alternative currency to the US dollar. President Trump has threatened to impose 100% tariffs on countries that don't comply, raising concerns that U.S. interest rate hikes will be prolonged to support the dollar.
In November, gold recorded a massive 3.41% decline, its biggest monthly decline since September 2023. The decline was due to concerns that tariff policy and geopolitical pressures could keep interest rates high for longer than expected.
Upcoming data shaping market outlook
This week's economic calendar is filled with data releases such as job information, ADP employment statistics, and non-farm employment numbers. Investors will be closely monitoring these reports, along with speeches from Fed officials, for further clues about the Fed's policy direction.
Major brokerages are predicting a 25 basis point rate cut in December after recent inflation data matched expectations. The Fed's dovish stance, along with continued central bank purchases and safe-haven demand due to geopolitical uncertainty, could support gold.
