Gold fell on Monday as a stronger dollar dented the metal’s appeal, with investors awaiting U.S. non-farm payrolls data and minutes of the latest Federal Reserve meeting due later this week for clues on U.S. monetary policy.
Spot gold was down 0.4% at $1,912.63 per ounce by 1113 GMT, while U.S. gold futures fell 0.5% to $1,920.60. Bullion lost 2.5% in the April to June quarter.
There has been a slight decline in safe-haven gold due mainly to the risk-on mood in the market, said Carlo Alberto De Casa, external analyst at Kinesis Money.
But the metal is holding above the $1,900 mark despite the rate hike outlook, and prices could trade in the $1,900-$1,930 range before the release of the minutes of the Fed’s June 13-14 meeting, he added, which should contain further clues on policy.
The dollar index rose 0.2%, making gold more expensive for other currency holders, while the benchmark 10-year U.S. Treasury yield, which last week hit its highest level since March, was last up at 3.854%.
Stagnant U.S. consumer spending in May suggested the Fed’s rate hikes to tame inflation were slowly working. But the core PCE price index, the Fed’s preferred measure of tracking inflation, rose 4.6% year-on-year after climbing 4.7% in April.
It’s therefore too early to suggest the Fed can think about rate cuts, and gold could be dragged below $1,900 again if another strong U.S. jobs report on Friday paves the way for more hawkish policy, Exinity Chief Market Analyst Han Tan said.
High interest rates discourage investment in non-yielding gold. Investors see an 89% chance of a 25 basis-point U.S. rate hike in July, according to CME’s Fedwatch tool.
Among other precious metals, spot silver held steady at $22.76 per ounce, while platinum gained 0.2% to $903.26. Palladium was little changed at $1,227.15.
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