Investing.com-- Gold prices fell Monday, retreating from last week’s sharp gains, even as the U.S. dollar gave up gains as investors remained cautious ahead of the Federal Reserve's upcoming interest rate decision later this week.
Spot Gold declined 1.1% to $2,741.97 per ounce, while Gold Futures expiring in February dropped 1.2% to $2,772.05 an ounce by 4:45 p.m. ET (21:45 GMT).
The yellow metal had gained nearly 3% last week on Trump’s rate cut demand, and expectations of gradual imposition of U.S. tariffs.
“Although renewed USD strength this morning following escalation between the US and Colombia is providing some headwinds to gold in early morning trading,” ING analysts said in a recent note.
Trump’s tariff jitters, Fed meeting in focus
Trump imposed a 25% tariff on Colombian imports overnight after Colombia's President Gustavo Petro blocked U.S. deportation flights.
Following Petro's proposal to use Colombia's presidential aircraft and accept deportees, Trump has put a hold on the tariffs, marking an intermediate resolution to the diplomatic standoff.
The US Dollar Index gave up gains to trade 0.8% lower on Monday, after recording its worst weekly fall in two months.
A stronger dollar typically drives gold prices lower because it makes the metal costlier for buyers using other currencies.
Moreover, investors are cautious ahead of the Federal Reserve's policy meeting due later in the week.
Markets expect the Fed to likely hold interest rates steady at the end of its two-day meeting on Wednesday, with the first cut of 2025 priced in June, according to CME FedWatch.
Gold tends to fall on higher interest rates because it becomes a less attractive investment relative to interest-bearing assets.
Other precious metals also fell due to a strong dollar. Platinum Futures slipped 1% to $961.95 an ounce, while Silver Futures slumped 1.9% to $30.580 an ounce.
Copper falls after 2-month high
Copper prices retreated on Monday as the dollar rebounded, and uncertainty around Trump’s tariff policies weighed on the red metal.
Copper had hit a two-month high on Friday on Trump’s softer tone towards Chinese tariffs.
Benchmark Copper Futures on the London Metal Exchange fell 2% to $9,096.00 a ton, while February Copper Futures dropped 1.8% to $4.2420 a pound.