Gold prices settled lower on Monday, after posting a gain last week, as traders awaited a Tuesday inflation report followed by the conclusion of the Federal Reserve’s June policy meeting on Wednesday.
Price action
-
Gold futures for August delivery
GC00,
-0.32% GCQ23,
-0.32%
fell $7.50, or 0.4%, to settle at $1,969.70 per ounce on Comex, down a second straight session. -
Silver futures for July delivery
SI00,
-1.15%
SIN23,
-1.15%
fell by 35 cents, or 1.4%, to $24.06 per ounce. -
Palladium for September delivery
PAU23,
+3.27%
gained $36.30, or 2.8%, to $1,341.10 per ounce, while July platinum
PLN23,
-1.75%
fell by $17.50, or 1.7%, to $995.30 an ounce, the lowest for a most-active contract since late March. -
Copper for July delivery
HGN23,
-1.08%
declined by 4 cents, or 1%, to $3.75 per pound.
What’s happening
With U.S. benchmark stock indexes up along with the dollar and Treasury yields, it would’ve been a surprise if gold didn’t fall on Monday, said Adrian Ash, director of research at BullionVault.
Expectations that the Fed will pause interest-rate hikes at its meeting this week is “pretty much 100% priced in, so all eyes are on Wednesday’s language and dot plots,” he told MarketWatch.
However, a hot Tuesday U.S. inflation report could push the central bank toward a surprise hike following Friday’s hotter-than-expected monthly U.S. jobs data.
See: Fed might hike interest rates again in June instead of a ‘skip,’ some economists think
As the U.S. central bank assessed whether higher interest rates are slowing inflation, markets have priced in a “skip” decision Wednesday from Fed Chairman Jerome Powell — “a scenario where hikes are paused but may resume at a later date,” said Stuart O’Reilly, market insight analyst at The Royal Mint, in emailed commentary.
The situation suggests the Fed “believes we’re approaching a pivotal moment and are looking to carefully understand the impact of recent rate rises on inflation and the U.S. economy,” he said.
While some could see the Fed’s upcoming decision as a “non-event, gold traders will be reading between the lines, and looking for any signal from Powell that the U.S. is heading for a recession or that core inflation remains sticky,” said O’Reilly.
Gold’s spot price hovers around the $1,950 mark, but “this could be propelled higher if economic data begins not to match the [Fed’s] intended outcomes,” he said. “Investors will be considering whether their portfolios are optimized for the economic environment we find ourselves in, and will be closely monitoring interest rates alongside broader economic indicators.”
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