Gold and silver prices fell in early trade on the Multi Commodity Exchange (MCX) on Monday morning, as traders booked profits after the recent rally.

The decline came amid weak demand in the spot market, although losses were limited because the US dollar weakened and investors expect the US Federal Reserve to announce a rate cut this week.

During early trade, MCX gold February futures were trading 0.04 per cent lower at Rs 1,30,409 per 10 grams. "MCX Gold remains within a rising channel pattern and is currently hovering around the Rs 1,30,300–Rs 1,30,400 zone, after facing rejection near Rs 1,32,250, which now acts as the immediate resistance," experts said.

MCX silver March futures slipped 1 per cent to Rs 1,81,600 per kg.

The slight pullback follows strong gains in the previous session, when gold futures rose 0.30 per cent to close at Rs 1,30,462 per 10 grams and silver futures jumped nearly 3 per cent to settle at Rs 1,83,408 per kg after touching a new record high of Rs 1,85,234 during the day.

Prices of precious metals remain highly volatile as investors wait for the outcome of the US Federal Open Market Committee (FOMC) meeting scheduled for December 10.

The US central bank will announce its policy decision at a time when economic indicators are sending mixed signals.

The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, rose 0.3 per cent in both August and September.

On a yearly basis, it increased to 2.8 per cent in September from 2.7 per cent in August -- showing that inflation is still slightly elevated.

At the same time, growing expectations of a rate cut have put pressure on the US dollar. The dollar index is hovering near a six-week low of 98.76, a level last seen on December 4.

A weaker dollar makes gold cheaper for buyers using other currencies, helping limit the downside for the yellow metal.

Analysts said that gold and silver markets are likely to remain choppy until the Fed provides clarity on its interest rate path.