On Monday, gold prices experienced a drop as the dollar rallied, reversing a previous gain of over 2% from the prior session. The decrease in gold prices was influenced by U.S. inflation data that came in lower than expected, raising market anticipations of potential interest rate cuts from the Federal Reserve. Currently, spot gold was down 1.14%, priced at $4,985.90 per ounce, while U.S. gold futures fell by 0.84% to $5,003.90 per ounce.

The rise in the dollar index contributed to the decrease in gold prices, as a stronger dollar makes gold, which is priced in U.S. currency, more expensive for international buyers. This dynamic typically leads to reduced demand for gold when the dollar is strong. The recent data released by the U.S. Department of Labor indicated that the Consumer Price Index (CPI) rose by only 0.2% in January, below analysts' expectations of a 0.3% increase, which is significant as it bears implications for future Federal Reserve monetary policy decisions that could prioritize economic easing.

Market participants are closely watching the developments around inflation and interest rate policies, with expectations building for an aggregate easing of monetary policies in the coming months. As the financial landscape shifts with these indicators, the performance of gold will likely be influenced by changes in dollar value and interest rate expectations, making it a key point of focus for both investors and market analysts in the short term.