Gold prices fall on strengthening dollar, focus on inflation and central bank meetings

Gold prices edged lower on Monday as the dollar and bond yields firmed while traders prepared for a busy week of key US inflation prints and key central bank policy meetings with all eyes on the Federal Reserve.

Spot gold fell 0.4% to $1,953.77 an ounce as of 1:40 p.m. EDT (1740 GMT). US gold futures were down 0.4% at $1,969.70.

The dollar index gained 0.2%, making gold more expensive for foreign buyers, while a rise in US Treasury yields made zero-yielding bullion less attractive. [USD/] [US/]

“Going into this week with gold is almost like flipping a coin,” said Bob Haberkorn, senior market strategist at RJO Futures.

The US consumer price index for May is due on Tuesday at 8:30 a.m. EDT, with the producer price index reading due on Wednesday morning ahead of the Fed’s interest rate decision later that day.

“The fact is that if we hold off on raising rates, gold will go up significantly despite a hawkish (Fed) statement,” Haberkorn said.

There is a 76% chance the Fed will keep rates unchanged and a 71% chance it will hike in July, according to the CME’s FedWatch tool.

The European Central Bank and the Bank of Japan will give their rate decisions on Thursday and Friday, respectively.

“Gold is trading on the assumption that US interest rates will remain where they are with any hike likely to push the precious metal towards $1,900 an ounce,” Kinesis Money analyst Rupert Rowling said in a note.

Silver fell 1.3% to $23.95 an ounce, while platinum fell 1.92% to a two-month low of $989.67.

Palladium, used in emissions-controlled equipment in cars, rose 1.4% to $1,342.27 on Friday after hitting its lowest since May 2019.

“Palladium could return above $1,500 in the fourth quarter of this year, although it is currently under pressure from automakers,” said Jacob Smith, analyst at Metals Focus.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,