Gold prices edged lower on Monday as the dollar strengthened, with investors keenly awaiting remarks from Federal Reserve officials and key economic data for more insights on the U.S. interest rate trajectory.
Spot gold prices decreased by 0.2% to $2,407.29 per ounce as of 0049 GMT. Concurrently, U.S. gold futures saw a 0.4% decline to $2,411.20. The firming dollar, spurred by political uncertainties and an attack on U.S. presidential candidate Donald Trump, made gold more expensive for buyers holding other currencies.
Picture: Gold closes slightly down in turbulent trading as seen on the VT Markets app.
The dollar’s rise followed increased political uncertainty. Investors believe the attack on Trump may enhance his chances of winning, injecting a new level of unpredictability into the market. A stronger dollar usually makes greenback-priced gold costlier for buyers using other currencies, thereby affecting demand.
Investors are closely watching for comments from Federal Reserve Chair Jerome Powell and other officials scheduled for later in the week. This week’s economic data, including U.S. retail sales, industrial output for June, and weekly jobless claims, will also provide crucial insights.
U.S. consumer prices fell in June for the first time in four years, increasing the likelihood of the Federal Reserve cutting interest rates in September. Lower interest rates generally enhance the appeal of non-yielding bullion, as it tends to perform better in low-interest-rate environments.
Also read: Gold edges higher as focus turns to Fed Powell’s testimony
Physical gold demand in key Asian markets slumped last week. High prices deterred buyers, prompting dealers in India to offer the largest discounts in nearly three and a half months to attract consumers. Alongside gold, spot silver fell by 0.5% to $30.62 per ounce, platinum slipped by 0.3% to $995.35, and palladium dropped by 1.3% to $956.81.
The market’s attention remains focused on the Federal Reserve’s actions and political developments in the U.S. A cut in interest rates could support gold prices, but ongoing political uncertainties and a strong dollar may pose challenges. Investors should monitor upcoming economic data and Fed comments to navigate these turbulent times effectively.
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