Gold prices fell below key levels in Asian trade on Monday as strong labor market data saw traders rethink bets that the Federal Reserve will begin trimming interest rates earlier in 2024.

Spot prices fell below the $2,000 an ounce level, marking a sharp reversal from record highs hit last week. A resilient dollar and signs of strength in the U.S. economy were the key weights on the yellow metal, as risk sentiment improved.

Spot gold fell 0.4% to $1,996.24 an ounce, while gold futures expiring February fell 0.1% to $2,012.75 an ounce by 23:19 ET (04:19 GMT). Both instruments were trading about $150 below record highs hit last week.

Fed meeting looms, March rate cuts in doubt
Traders were also wary of gold before a Fed meeting later this week, where the central bank is widely expected to keep interest rates on hold.

But the Fed’s outlook for loosening monetary policy in 2024 will be closely watched, especially as recent data showed the U.S. labor market running strong.

Friday’s nonfarm payrolls reading saw markets sharply pare expectations for a rate cut by as soon as March 2024- a move that sparked heavy losses in gold.

Risk appetite also improved after the reading, given that it signaled just enough strength in the U.S. economy for the possibility of a “soft landing.” Gold prices fell, while stock markets advanced.

Beyond the Fed, interest rate decisions from the Bank of England, European Central Bank and Swiss National Bank are due this week, with all three banks likely to signal higher-for-longer interest rates.

Higher interest rates dent gold prices by pushing up the opportunity cost of investing in the yellow metal, which offers no yields.

U.S. inflation data for November is also due later in the week.

Copper dips as China disinflation feeds demand fears
Among industrial metals, copper prices fell on Monday tracking weak economic signals from major importer China.

Copper futures expiring March fell 0.6% to $3.8087 a pound.

Data over the weekend showed Chinese consumer price index inflation contracted for a second straight month in November, while a contraction in producer price index inflation deepened into a fourteenth consecutive month.

The readings indicated that the world’s largest copper importer was likely to see sustained economic weakness in the coming months, as spending failed to pick up despite continued liquidity measures from Beijing.

The weak inflation readings largely overshadowed recent data that showed Chinese copper imports remained robust in November.