Gold prices fell on Monday, pressured by
an uptick in US Treasury yields as attention turned to US
inflation data this week that could strengthen the case for
aggressive interest rate hikes by the Federal Reserve.
Spot gold was down 0.5% at $1,841.64 per ounce by
12:41 pm EDT (1641 GMT), while US gold futures fell
0.3% to $1,844.40.
US bond yields were higher in the run-up to data on Friday
which is expected to show still high inflation. The dollar also
firmed , making gold less appealing for overseas buyers.
Although gold is considered a hedge against inflation,
higher interest rates to tame the rising price pressures dim the
appetite for non-yielding bullion.
“If we do get a little bit of a hotter inflation report,
gold will weaken … It is a kind of a wait-and-see approach as
far as when will we find out how far the Fed will raise rates to
control this inflation,” said Edward Moya, senior analyst with
But the overall belief that inflation is decelerating and
will continue to decelerate, along with the Fed policy being
priced in, should provide some stability for gold prices, Moya
While the Fed is on track to deliver half-a-point interest
rate hikes at its June and July policy meetings, a high
inflation reading would add to expectations of aggressive
tightening even in the second half of the year.
“Summer trading has officially begun, which suggest prices
could remain range-bound near $1850/oz, but the set-up remains
for additional liquidations on the horizon,” TD Securities said
in a note.
Investors also await the European Central Bank meeting on
Silver rose 0.7% to $22.06 per ounce, palladium
gained 1.4% to $2,003.20 and platinum rose 1.5% to
(Reporting by Kavya Guduru in Bengaluru; Editing by Aditya