The precious metal declined slightly on Monday as the dollar inclines against majors. The dollar gained after the release of the Job's report on Friday which showed relatively lower losses than expected. However, unemployment hit 7.2% recording the highest level since 1993. Meanwhile, the outlook is abysmal for the major economies as the reports released are suggesting that the recession will deepen. On the other hand, oil is continuing its fall trading below $41 a barrel.
The U.S. dollar strengthened against the euro with more pressure on the 16-nation's currency ahead of the ECB expected interest rate cut later this week. Analysts argue that the ECB will cut its benchmark interest rate to the lowest since 2005 to boost the economies of the Euro Zone. Also the dollar is inclining against the sterling for the second day while it declined against the Japanese yen. Thus, the dollar's surge today decreased the demand on gold as a safe haven asset.
Crude oil fell on expectations that OPEC cut will not be sufficient to stop prices from falling. The oil cartel started implementing the cut agreed upon during their previous meeting in Algeria but the worsening economic conditions for the major economies is implying that global demand will decline even more. The black gold extended its fall for the fifth day despite the escalating geopolitical tensions in the oil-rich Middle East. The decline in oil prices reduced the appeal of gold as a hedge against inflation.