Gold prices declined today following a more than 2% surge in the previous session, as the US dollar strengthened ahead of key inflation data that could provide further guidance on the trajectory of interest rates in the United States. Market volatility is influenced by both economic concerns and ongoing geopolitical tensions.

Spot gold fell by 0.4% to $4,961.57 per ounce at 01:12 GMT, after gaining 2.1% in the previous session. Meanwhile, US gold futures for April delivery dropped 0.6% to $4,981 per ounce.

The US dollar reached its highest level in over a week, making dollar-denominated gold more expensive for holders of other currencies, adding downward pressure on prices. Additionally, markets in mainland China, Hong Kong, Singapore, Taiwan, and South Korea were closed for the Lunar New Year, resulting in lower trading volumes and reduced volatility.

According to the CME FedWatch Tool, markets currently anticipate three potential interest rate cuts of 25 basis points each this year. Investors are closely watching the weekly US jobless claims report due later today, as well as personal consumption expenditures (PCE) data, the Fed’s preferred inflation measure, scheduled for release tomorrow, for clues on the future direction of monetary policy.

Historically, gold, which yields no income, tends to perform well in low interest rate environments, serving as a safe haven during economic or geopolitical uncertainty. On Wednesday, gold surged more than 2% due to safe-haven demand after two days of peace talks in Geneva between Ukraine and Russia ended with no significant progress. Ukrainian President Volodymyr Zelensky expressed dissatisfaction with the outcome, while US officials described the negotiations as having achieved “tangible progress.”

Other precious metals also faced declines: spot silver fell 0.5% to $76.83 per ounce after dropping over 5% on Wednesday. Platinum slipped 0.1% to $2,069.35 per ounce, while palladium dropped 0.5% to $1,707.53 per ounce.