Gold prices dip as strong dollar offsets Fed rate-cut hopes

Gold prices slipped on Monday after hitting their highest level in nearly two weeks, as a stronger US dollar pressured the precious metal despite expectations that the Federal Reserve may ease interest rates soon.

According to a report from CNBC, spot gold was down 0.2 percent at $3,364.29 per ounce as of 2:56 a.m. GMT, while US gold futures for December delivery dropped 0.3 percent to $3,409.60 per ounce.

The US dollar index firmed 0.2 percent against major currencies, making bullion more costly for buyers holding other currencies. Analysts said gold could find support around $3,350 an ounce, with resistance projected in the $3,380 to $3,400 range.

Fed Chair Jerome Powell signaled last Friday that policymakers are leaning toward a rate cut at the September 17 meeting. Markets are now pricing in an 87 percent probability of a quarter-point reduction. Lower interest rates tend to lift demand for gold, as they reduce the opportunity cost of holding non-yielding assets.

Traders are also awaiting fresh US economic data, with the personal consumption expenditure (PCE) inflation index due on Friday, August 29. The reading is expected to provide further clues on how aggressive the Fed will be in adjusting monetary policy.