June 19 (Reuters) – Gold prices moved lower in holiday-thinned trade on Monday, as the US dollar bounced back from the previous session’s lows, with markets looking ahead to US Federal Reserve Chair Jerome Powell’s testimony on Capitol Hill later in the week.
Spot gold was down 0.3% to USD 1,952.00 per ounce by 10 a.m. EDT (1400 GMT). US gold futures fell 0.4% to USD 1,964.00. Trading is expected to be slow with US markets closed for the Juneteenth holiday.
The dollar index edged up from a one-month low hit on Friday. A stronger dollar makes bullion less attractive for buyers holding other currencies.
The question remains on what would it take to make gold break out of its range-bound trading between USD 1,940 and USD 1,980, “given that the events of the last week failed to ultimately do it,” Craig Erlam, senior markets analyst at OANDA, said.
Bullion posted a 0.2% weekly fall last week as traders ramped up bets for a July rate hike after Fed officials struck a hawkish tone in their first comments since the central bank this month held interest rates steady after 10 straight hikes.
Markets are now awaiting Powell’s congressional testimonies on Wednesday and Thursday for cues on future rates.
“Real interest rates will continue to rise as inflation falls later in the year, reducing gold’s appeal as a non-yielding asset, and should strengthen the dollar,” Heraeus analysts wrote in a note.
Additionally, the European Union awaits its inflation print on Wednesday, with markets having largely priced in a rate hike in July, while the Bank of England is expected to raise rates by another 25 bps on Thursday.
Interest rate hikes raise the opportunity cost of holding non-yielding bullion.
Spot silver fell 0.7% to USD 23.98 per ounce, platinum was down 0.5% to USD 977.25, while palladium dropped 0.7% to USD 1,400.65.
(Reporting by Seher Dareen in Bengaluru; Editing by Varun H K and Sonia Cheema and Chizu Nomiyama)