Gold’s impressive rally came to a slight pause on Monday as rising U.S. Treasury yields and a stronger dollar applied pressure on the precious metal, while investors await key U.S. economic data releases this week for clues on the Federal Reserve’s rate outlook. Spot gold prices edged down 0.2% to $2,742.49 per ounce, pulling back from its record high of $2,758.37 achieved last Wednesday. U.S. gold futures held steady at $2,755 per ounce.

Treasury Yields and Dollar Weigh on Gold’s Appeal

Rising yields on the benchmark 10-year Treasury note, which reached a three-month high, along with a dollar index set for its strongest month since April 2022, have made gold a less appealing option for international buyers. As gold is priced in dollars, a stronger greenback typically reduces demand from overseas investors.

Analysts at TD Securities maintain optimism about gold’s upside potential. “I think the $2,800 target is certainly achievable this week,” said Daniel Ghali, a commodity strategist at the firm. He added that uncertainty surrounding the upcoming U.S. election may be supporting gold prices, with a heightened focus on any catalyst that could drive buying interest.

With less than a week until the November 5 U.S. election, Vice President Kamala Harris and former President Donald Trump are in a highly competitive race, especially in key battleground states. This political tension has led to heightened caution in the markets.

Market Awaits Critical U.S. Economic Data

Investors are closely watching the release of U.S. economic indicators that could affect Federal Reserve policy and, in turn, impact gold prices. Key reports on the calendar include the ADP employment report on Wednesday, Personal Consumption Expenditures (PCE) on Thursday, and October’s payroll report on Friday. Strong data could boost expectations for continued rate hikes, pressuring gold further, while weaker results could renew safe-haven demand for the metal.

“Gold is still in a buy-on-dips mode,” noted StoneX analyst Rhona O’Connell. “While some investors are waiting for a significant $200 correction to jump in, other buyers are supporting prices on smaller pullbacks.”

This year has been marked by increased geopolitical tensions, with many countries worldwide holding critical elections, O’Connell highlighted. Even after elections wrap up, uncertainty remains a constant in markets, adding to the appeal of gold as a hedge against volatility.

Precious Metals Markets Adjust

In other precious metals, spot silver slipped slightly by 0.1% to $34.07 per ounce. Platinum gained 1% to reach $1,032.47, while palladium climbed 1.6% to $1,212.31, driven in part by concerns over sanctions on Russia, one of the world’s top producers of the metal.

Gold’s pause in momentum may be short-lived as both political and economic factors continue to contribute to its appeal. Investors will be watching closely to see if the precious metal hits the anticipated $2,800 mark in the days ahead.