Gold prices edged lower on Monday as a steady dollar make bullion more expensive for holders of other currencies, although investors largely bet on the US Federal Reserve hitting the brakes soon on its rate-hike trajectory.
Spot gold edged 0.1% lower to USD 1,952.35 per ounce by 0658 GMT. US gold futures were down 0.4% to USD 1,956.20.
The dollar edges up from its April 2022 lows, as traders waited on economic data and policy decisions before selling it down any further.
“Gold’s post-CPI rally has paused for breath, and that leaves the potential for a technically-driven retracement to the USD 1,940–USD 1,950 region,” said Matt Simpson, a senior market analyst at City Index.
Last week’s U.S. data hinted at a disinflationary trend as consumer prices grew at their slowest pace in more than two years.
“If peak cycles are close, it is another supportive feature for gold, alongside central bank buying,” Simpson added.
Hikes are expected from the Fed and European Central Bank next week, and markets see the U.S. central bank likely stop before cuts next year, while in Europe another hike is expected.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Only a break above USD 1,961 could confirm a continuation of the uptrend towards the range of USD 1,971 to USD 1,977, according to Reuters technical analyst Wang Tao.
Top gold consumer China’s economy grew at a frail pace in the second quarter.
In the wider market, prices of base metals fell despite support from the recent weakness in the dollar as tepid economic data fanned demand concerns.
With hopes of stimulus measures in July or August, riskier assets such as base metals and equities would be bought more, which could dent gold’s demand, said Vandana Bharti, assistant vice-president of commodity research at SMC Global Securities.
“Otherwise, we are expecting a range-movement in gold with a bias to the upside.”
Spot silver fell 0.7% to USD 24.76 per ounce, platinum was down 0.6% to USD 965.39 while palladium XPD= dipped 0.8% to USD 1,261.47.
(Reporting by Seher Dareen in Bengaluru; Editing by Rashmi Aich, Eileen Soreng and Sherry Jacob-Phillips)