Spot gold was down 1.5% at $2,354.59 an ounce at 12:01 pm ET (1601 GMT), after rising to its highest level since May 22 on Friday. US gold futures fell 1.5% to $2,362.70.
“This looks like a lot of profit taking, and equities are strong here this morning, which has a competitive factor with precious metals,” said Bob Haberkorn, senior market strategist at RJO Futures.
The Nasdaq and S&P 500 hit record highs, while the Dow hit a more than one-month high.
“However, I think you’ll see gold higher based on forecasts that the Fed will cut rates. The Fed Watch tool showed a rate cut in September and then another cut in November and December would likely be bullish for gold.”
Last week’s data pointed to a softening of the labor market, putting the US central bank on track to start cutting interest rates soon.
Markets are currently pricing in a 71% chance of the Fed cutting interest rates in September and another cut in December.
“If we get another downside surprise in the inflation data, which we’ve seen pretty consistently in the US data, that would be a tailwind for gold,” said Kyle Roda, financial markets analyst at Capital.com.
Investors’ attention this week will be on Fed Chair Jerome Powell’s semi-annual congressional testimony, comments from a range of Fed officials and US inflation data due on Thursday.
Elsewhere, top consumer China’s central bank refrained from buying gold in its reserves for the second month in a row in June.
Spot silver fell 1.8% to $30.64 an ounce, platinum fell 2.5% to $1,001.60 and palladium fell 2% to $1,005.98.
(Reporting by Brijesh Patel and Shereen Elizabeth Varghese in Bengaluru; Editing by Taseem Zahid and Shailesh Kuber)
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