Gold slips as traders wait for fresh Fed guidance while the dollar strengthens
Gold's spot price dropped by 0.3% to $1,952.00 per ounce. and Palladium lost 0.7% to $1,400.65, platinum was down 0.5% to $977.25, and spot silver down 0.7% to $23.98 per ounce.
The U.S. dollar recovered from its lows from the previous session as gold prices declined on Monday during holiday-slowed trading, with markets anticipating Jerome Powell's speech before Congress later that week.
By 10 a.m. EDT (1400 GMT), spot gold was down 0.3% to $1,952.00 per ounce. Futures for U.S. gold decreased 0.4% to $1,964.00. Due to U.S. markets being closed for the Juneteenth holiday, trading is anticipated to be slow.
The dollar index slightly increased after hitting a one-month low on Friday. Bullion becomes less appealing to buyers holding other currencies when the dollar is stronger.
Given that the events of the previous week finally failed to cause gold to break out of its range-bound trading between $1,940 and $1,980, the question of what it would take to do so remains, according to Craig Erlam, senior markets analyst at OANDA.
After Fed policymakers adopted a hawkish tone in their first remarks since the central bank this month held interest rates constant after 10 straight raises, speculators increased their bets on a rate hike in July, which led to a 0.2% weekly decline in gold prices last week.
The markets are now waiting for hints about future rates in Powell's congressional testimony on Wednesday and Thursday.
"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," analysts at Heraeus stated in a note.
Additionally, the Bank of England is anticipated to raise rates by an additional 25 basis points on Thursday while the European Union awaits its inflation reading on Wednesday. Markets have already priced in a rate hike in July.
The potential cost of owning non-yielding bullion increases as interest rates rise.