Gold edged down on Monday amid growing speculation that the Fed will likely maintain higher interest rates for an extended period of time, the yellow metal managed to stay above critical levels due to some safe-haven demand and short-term dollar weakening.

Spot gold slumped by 0.3% to $2,022.91 per ounce, while gold futures dipped 0.2% at $2,024.30 per ounce.

In January, traders reversed bets that Fed would start lowering interest rates as early as March 2024, which led to a sharp increase in profit-taking and a sharp decline in gold prices.

This unravelling reached a boiling point the previous week as gold nearly broke below the $2,000 per ounce level.

At that level, however, gold found robust support primarily due to rising demand for safe haven assets in the wake of escalating hostilities in the Middle East.

In contrast to early projections for interest rate cut, the CME Fedwatch tool revealed on Monday that traders were now pricing in a higher possibility that Fed will leave rates unchanged in March.