Gold prices are declining amid the prospect of higher interest rates for longer periods.

Gold prices fell during the Asian session today due to increasing bets that the Federal Reserve will keep interest rates higher for a longer period, despite some safe-haven demand and near-term weakness in the dollar, which kept the yellow metal above key levels.

The prices of the precious metal were affected by a significant dose of profit-taking in January as traders unwound expectations that the Federal Reserve would begin lowering interest rates by March 2024. The yellow metal approached breaking the $2,000 per ounce level at the end of last week.

However, gold found strong support at this level, primarily due to increased safe-haven demand in the face of escalating conflict in the Middle East. Some near-term profit-taking in the dollar, which declined from a one-month low on Monday, also supported precious metal prices.

Nevertheless, gold remained under pressure from the possibility of higher interest rates in the United States for a longer period.

Spot gold prices fell by 0.3% to $2,022.91 per ounce, equivalent to 7,464.53 UAE Dirhams and 240.01 per gram. Meanwhile, gold futures for February delivery fell by 0.2% to $2,024.30, equivalent to 7,469.66 UAE Dirhams and 240.18 per gram.

There is a series of key economic readings expected this week. Fourth-quarter GDP data is scheduled for release on Thursday, while Personal Consumption Expenditures (PCE) price index data, the Federal Reserve's preferred inflation gauge, is due on Friday.

These readings are widely expected to influence the Federal Reserve's interest rate plans for the year. While gold is expected to eventually benefit from potential rate cuts by the Federal Reserve, the timing and scale of these cuts remain uncertain.