WASHINGTON (dpa-AFX) - Despite a weak dollar, gold prices fell on Monday with traders unwinding some long positions due to a sell-off in equity markets. Although the Federal Reserve, which is scheduled to announce its monetary policy on Wednesday, is expected to deliver a couple of rate cuts this year, it is likely to hold rates unchanged on Wednesday.
Recent economic data has led to concerns about the Fed leaving rates on hold for a prolonged period, but many economists still expect the central bank to resume cutting rates sometime in the first half of the year.
The dollar index, which was up at 107.81 in the European session, dropped to a low of 106.97 in the New York session before recovering to 107.41, down just marginally from previous close.
Gold futures for January closed down $39.80 or about 1.43% at $2,737.50 an ounce, the largest decline in dollar as well as percentage terms in more than a week.
Silver futures for January settled lower by $$0.769 or nearly 2.5% at $30.254 an ounce, while Copper futures for January dropped to $4.2085, down $0.0815 or 1.9%.
Tariff concerns have resurfaced as the U.S. and Colombia pulled back from the brink of a trade war.
The Trump administration said on Sunday night it was pausing punitive tariffs against Colombia after its leader agreed to grant entry to U.S. military flights carrying deported migrants.
Earlier, Trump had threatened tariffs and sanctions on the country to punish it for refusing to accept military flights as part of his sweeping immigration crackdown.
The European Central Bank, the Bank of Canada and Riksbank are all expected to reduce key policy rates, but markets will closely watch any clues on the outlook.
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