The yellow metal saw some support last week as some soft labor data pushed up expectations that the Fed will skip a rate hike at the conclusion of a two-day meeting on Wednesday.

Inflation data, due on Tuesday, is also expected to factor into the Fed’s decision, given that the central bank’s main goal in this rate hike cycle has been to bring down inflation. While inflation is well below the near 40-year highs seen through 2022, it is still above the Fed’s 2% annual target.

Spot gold fell slightly to $1,958.94 an ounce, while gold futures fell 0.2% to $1,973.30 an ounce by 20:44 ET (00:44 GMT).

Gold in a tight trading range amid Fed, economic uncertainty

Gold prices have stuck to a trading range of between $1,930 and $2,000 an ounce over the past three weeks, with uncertainty over the economy and monetary policy offering little cues for a breakout.

Gold stands to benefit from any potential pause by the Fed, and is expected to see increased safe haven demand as global economic conditions worsen this year. But given that U.S. interest rates are likely to remain higher for longer, upside in the yellow metal may be limited as returns on debt appear more attractive.

Rising interest rates had battered gold prices through 2022, as the Fed enacted its most aggressive pace of monetary tightening since the 2008 financial crisis. But the prospect of a pause in 2023 has kept gold upbeat so far this year.

Other precious metals also retreated on Monday, with platinum futures down 0.1%, while silver lost 0.4%.

Copper awaits Chinese stimulus

On the other hand, copper prices rose slightly on Monday, recovering some recent losses as traders awaited more cues from major commodity importer China.

Copper futures rose 0.3% to $3.7707 a pound.

China, the world’s largest copper importer, is expected to roll out more stimulus measures in June, with markets positioning for potential interest rate cuts by the People’s Bank as an economic recovery in the country runs out of steam.

A swathe of weak Chinese economic data had pushed copper prices to six-month lows in May, with the red metal still struggling to recover.