Gold prices saw a slight dip on Monday as the U.S. dollar strengthened, with investors closely monitoring upcoming comments from Federal Reserve officials and economic data for further insights into the trajectory of U.S. interest rates.
As of 0250 GMT, spot gold had eased by 0.1% to $2,409.54 per ounce, while U.S. gold futures fell by 0.2% to $2,414.70 per ounce. The dollar’s rise, driven by safety bids following an attempted assassination of former U.S. President Donald Trump, contributed to the dip in gold prices. A stronger dollar typically makes gold more expensive for buyers using other currencies.
City Index senior analyst Matt Simpson commented on the market’s reaction: “I’m not convinced a Trump victory or loss directly links to a binary outcome for gold’s direction in the same way Fed policy expectations have been. But if Trump stirs up trade wars, then you’d think it builds a good case for gold to perform well under his presidency.”
Investors are keenly awaiting Federal Reserve Chair Jerome Powell’s speech later in the day, along with comments from other officials throughout the week. Key economic data due this week includes U.S. retail sales, industrial output for June, and weekly jobless claims.
Ilya Spivak, head of global macro at Tastylive, noted, “If we get another big miss on retail sales, it will reinforce there is a sense of urgency to cut rates, which could help gold. If gold breaks the $2,450 barrier, then prices will see new record highs.”
According to the CME Fedwatch Tool, markets are currently pricing in a 93% chance that the Federal Reserve will cut rates in September. Gold, which does not yield interest, tends to benefit in a low interest rate environment.
In other metals, spot silver rose by 0.4% to $30.88 per ounce. However, platinum slipped by 0.3% to $995.80 per ounce, and palladium dropped by 0.7% to $962.50 per ounce.
Meanwhile, data from China showed that the country’s economy slowed in the second quarter, fueling expectations that Beijing might need to implement more stimulus measures. China is a key consumer of metals, and any significant economic shifts in the region can have a notable impact on global metal markets.
As the week unfolds, investors will continue to watch for any signals from the Federal Reserve and economic data releases that could influence the future direction of gold and other precious metals.