Spot gold lost about $6 (-0.5%) to $1,343/oz on Monday. The movement is largely attributed to profit-taking and a rebound for the U.S. dollar.
Meanwhile, the silver price tumbled 1.1% (-20¢) to trade at $17.19/oz. Silver is typically more volatile than gold.
This follows the sudden pullback for the precious metals last week after President Trump voiced support for a strong dollar.
Platinum and palladium moved in opposite directions, trading around $1,010/oz and $1,080/oz, respectively.
December Data for Inflation, Spending, and Saving
On Monday the Department of Commerce reported that the Personal Consumption Expenditures (PCE) index showed muted inflation during December.
Core PCE, which ignores food and energy prices, rose 1.5% year-on-year. This is the Fed's favored measure of inflation but is still shy of the central bank's 2% target.
Nonetheless, the same report showed consumer spending rose 0.4% month-on-month during December, the best monthly increase since 2011. Spending data for November was revised higher.
Savings for Americans have dropped to a 10-year low, however. The last time savings were this low was right before the onset of the Great Recession.
The dollar was up 0.35% to 89.4 on the DXY index this morning. The greenback has fallen for seven consecutive weeks.
This caused the euro to lose almost 0.5% to below $1.24. The Japanese yen slipped 0.15% against the USD but still traded at ¥108.75 per dollar.
Stocks closed flat in Japan and were mixed across Asia. European indices also posted a mixed performance this morning.
Futures on Wall Street pointed lower after all three major indices rallied on Friday.
End of Month Brings Flurry of Economic News
The Federal Reserve Open Market Committee (FOMC) meets on Tuesday and Wednesday. Nonfarm payrolls, the big monthly employment report, will be released on Friday.
Traders are beginning to price in four rate hikes by the Fed this year, which would bring the federal funds rate to 2.5%.
There was a big selloff in the bond market as a result. The 10-year Treasury yield jumped four basis points to 2.70%, the highest since April 2014.
During January, the 5-year and 10-year T-notes have seen yields rise by 30 basis points.
Other experts, such as well-known economist Mohamed El-Erain, expect three rate hikes over the course of 2018.
In either case, most analysts don't anticipate the first rate hike from the Fed to come until March.
The stronger dollar knocked most commodities lower. WTI crude futures lost 1% to move back below $65.50/bbl on news that the U.S. rig count continues to rise.
Looking ahead, President Trump will make his first State of Union address tomorrow night.
Earnings reports for the fourth quarter are due soon from tech companies Microsoft, Facebook, and Alphabet (Google).
Other big firms like McDonald's, Exxon Mobil, Merck, Boeing, and Deutsche Bank will also release earnings this week.
Tax season is officially upon us: Americans can begin filing their taxes early.
It's worth noting that the tax cuts passed by Congress won't impact individual returns for 2017.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.