A stronger dollar pulled gold prices downward in thin trading on Monday as investors evaluated the future course of interest rates in the wake of hawkish comments from U.S. Federal Reserve policymakers.
By 0249 GMT, spot gold was down 0.1% to $1,955.49 per ounce. To $1,967.60, U.S. gold futures declined 0.2%.
Because the dollar index remained stable, buyers holding other currencies found bullion to be less appealing. [USD/]
In their initial remarks following the central bank’s decision last week to maintain the policy interest rate, Fed policymakers adopted a hawkish stance.
According to Matt Simpson, senior market analyst at City Index, “Gold has spent the majority of June between $1,935 and $1,970, and with no obvious catalyst on the horizon, traders prefer to trade the ranges and not fully commit to a breakout.”
Due to the Juneteenth holiday, the American stock markets will be closed on Monday.
Following the Fed’s hawkish pause after 10 straight rate hikes, traders increased their bets on a rate hike in July, which led to a little weekly decline in gold prices.
Although interest rate increases increase the opportunity cost of owning non-yielding bullion, gold is nevertheless seen as an inflation hedge.
According to the CME Fedwatch tool, traders are currently factoring in a possibility of a Fed rate hike in July of approximately 72%.
“Gold prices have a history of outperforming at the end of a Fed tightening cycle. Although the potential cost of owning gold has increased, we believe real yields will eventually begin to decline. Gold prices may benefit from this, according to OCBC FX strategist Christopher Wong.
Investors are now waiting for additional hints about future interest rates in Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday.
Spot silver prices decreased by 0.2% to $24.098 per ounce, platinum prices decreased by 0.4% to $977.61, and palladium prices were constant at $1,412.10 each.