Gold prices were little changed on Monday as a robust dollar kept the metal pressured, while investors cautiously awaited a key U.S. Federal Reserve meeting after data showed another uptick in inflation.
Spot gold traded at $1,783.01 per ounce by 0633 GMT, after a 1.5% drop to a more one-week trough on Friday. U.S. gold futures rose 0.1% to $1,784.801.
“Gold investors will be much more cautious being caught long above $1,800 now, even if the dollar retraces and gold prices rise,” said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA.
Reuters technical analyst Wang Tao also expects spot gold to retest a support at $1,776 per ounce.
Data released on Friday showed the jury was still out on the Fed’s view that inflation is transitory and should moderate with time, with the personal consumption expenditures price index advancing last month.
“Though the Fed might raise the amount of monthly taper targets, they will likely quite strongly say that no interest rate hikes are imminent. But none of this will be good news for gold as this should still drive the dollar and yields higher,” Oanda’s Halley said.
The Fed’s two-day policy meeting concludes on Wednesday.
“Selling pressure on an overtly hawkish central bank’s policy decision or on bullish economic data could lead to a bout of long liquidation and press gold prices towards $1,680,” Avtar Sandu, senior manager commodities at Phillip Futures in Singapore said in a note.
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding non-interest bearing gold.
The dollar steadied close to a more than two-week high hit on Friday, making gold less appealing to buyers holding other currencies.
Spot silver fell 0.2% to $23.80 per ounce. Platinum gained 0.9% to $1,026.58, while palladium eased 0.3% to $1,996.57.
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Reference: CNBC,Reuters
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