Gold prices fell to their lowest level in more than five weeks today, Monday, with the rise of the dollar index and US bonds.
Meanwhile, the markets are awaiting the release of the US Federal Reserve's July meeting minutes this week which may guide expectations on future interest rates.
Gold and the dollar now
Gold futures fell 0.13% to $1,944 an ounce.
While spot contracts for gold fell by 0.1% to 1912 dollars an ounce.
On the other hand, the dollar index rose by 0.14% to 102,830 points.
Gold at settlement on Friday
Gold futures contracts stabilized at the end of trading, on Friday, despite the rise in the dollar index to its highest levels since the beginning of this week, and after the release of new economic data.
The prices of the yellow metal contracts for August delivery were stable at 1912.9 at the close, but recorded losses of 1.3% over the course of the week.
Gold may fall below $1900
US bond yields rose, lifting the dollar to its highest level since July 7, after data on Friday showed that producer prices rose slightly more-than-expected in July as the cost of services rebounded at the fastest pace in nearly a year.
Data in the United States showed today that the producer price index rose by 0.3% in July on a monthly basis, exceeding expectations when it grew by 0.2%. The index rose by 0.8% in July compared to the same month last year, after rising 0.2% in June.
On the other hand, consumer confidence in the United States, according to University of Michigan data, declined slightly in preliminary estimates for the current month, but remained near its highest level since October 2021, reflecting continued optimism with the slowdown in inflationary pressures.
“The US dollar appears to be heading higher, and bond yields are likely to continue to rise as well,” said Clifford Bennett, chief economist at ACY Securities.
Higher interest rates and Treasury yields increase the opportunity cost of holding non-interest gold, which is priced in dollars.
China's data on retail sales and industrial production is due on Tuesday. Markets are also awaiting US retail sales figures on Tuesday, followed by minutes from the Federal Reserve's July meeting on Wednesday.
Bennett added, “The Fed's minutes this week will definitely be hawkish, and therefore, gold may remain under pressure and drop as low as $1,900, or even $1,880.”
Meanwhile, the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reflects investor interest in gold, as the fund reported that its holdings fell to their lowest level since late January 2020.
Friday's data showed that Comex gold speculators cut their net long position by 23,755 contracts, to 75,582 in the week ending Aug. 8.
other metals
Among other precious metals, spot silver fell 0.4% to $22.59 an ounce, after matching the lowest level last seen on July 6. Platinum fell 0.8% to $905.04, while palladium settled at $1,292.97.
