Gold prices were little changed on Monday as a stronger U.S. dollar weighed on bullion’s appeal, while markets awaited key economic data for further information on the Federal Reserve’s rate hike path ahead.
- Dollar close to two-week highs
- Gold fell 2.2% in June and 2.5% in Q2
Spot gold (Yellow Metal) was flat at $1,919.89 per ounce by 0537 GMT. U.S. gold futures (Yellow Metal) fell 0.1% to $1,927.50.
“Over the near term, I suspect a pullback towards the $1,910-$1,913 area will be snapped up and bulls will try and target the highs around $1,937,” said Matt Simpson, senior market analyst at City Index.
Simpson said buying by bargain hunters could be supporting gold.
While stagnant U.S. consumer spending in May suggested the Fed’s rate hikes to tame inflation were slowly working, the core PCE price index, the Fed’s preferred measure of tracking inflation, increased 4.6% year-on-year, after advancing 4.7% in April.
Investors see an 87% chance of a 25 basis points rate hike in July, according to CME’s Fedwatch tool , and expect rates to stay in the 5.25%-5.5% range before cuts in 2024.
Bullion ended 2.5% lower for the second quarter on expectations of a longer Fed rate hike path. High interest rates discourage investment in non-yielding gold.
The dollar index (DXY) was close to the two-week high hit on Friday, making gold expensive for holders of other currencies.
A U.S. data-heavy week includes the U.S. Labor Department’s job openings and labour turnover survey, monthly payrolls report and minutes of the June 13-14 Fed meeting.
While strong economic data could see the Fed hawkish in the short term, the ending of its hiking cycle in the second half of 2023 could be structural support in the medium and long term, said ANZ analysts in a note.
Spot silver (White Metal) rose 0.5% to $22.87 per ounce, platinum (PL) was up 0.1% to $901.84 while palladium gained 0.9% to $1,237.97.