By FX Empire.com

Gold prices fell on Monday, as the U.S. dollar gained strong momentum after the Bank of Japan intervened in the currency market to curb the strength of the Yen after it rose to a record high last week against the U.S. dollar. The strength of the U.S. dollar was further supported by the ongoing jitters regarding the European debt crisis amid ongoing skepticism over the lack of details on the EU debt plan.

Moreover, the Chicago PMI was released from the United States for the month of October, where the Chicago PMI eased to 58.4 from 60.4 and below median estimates of 59.0, which also weighed down on confidence, while providing the U.S. dollar with some bullish momentum, putting negative pressure on gold as a dollar denominated asset.

The outlook for gold remains generally to the upside, however, we still expect volatility to continue to dominate gold prices over the short term, and that could still weigh down on gold prices, but overall, our general outlook for gold prices remains to the upside. Trader will be following the rate decision from Australia, as the RBA is expected to cut rates by 25 basis points to 4.50%, while the focus will remain on the FOMC’s rate decision on Wednesday, where some believe the Fed could embark on another round of quantitative easing, although recent fundamentals from the United States suggest the Fed will keep the monetary policy unchanged.

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