Reuters
Gold prices settled lower on Monday, suffering a monthly decline, as the dollar index was on track to notch its best month in more than a year.
June gold fell $4.20, or 0.3%, at $1,319.20 an ounce, ending off its lows of the session. June gold notched a 0.6% monthly decline, based on the closing level on March 29.
The ICE U.S. dollar index was up 0.2% at 91.78. Its moves can influence appetite for dollar-priced commodities, including the yellow metal, to investors using other currencies. For the month, so far, the dollar has strengthened against six major rivals by the most since February 2017, up 1.8%, at last check, according to FactSet data.
“The dollar index has been pushed higher due to [Federal Reserve] policy and the Fed[‘s] needs to address the higher yield situation,” said Naeem Aslam, chief market analyst at Think Markets. But “we think market participants are getting ahead of themselves and there is a strong need for reality check,” he said, adding that perhaps this week’s Fed meeting will “provide that reality check.”
The central bank’s policy makers are slated to start a two-day meeting on Tuesday, and they are expected on Wednesday to leave interest rates on hold and signal no change to a tightening path of two more rate increases in 2018. However, that’s a course of action that some market participants believe is too slow to keep up with mounting inflation risks.
In U.S. economic news, the personal-consumption-expenditure inflation gauge, or PCE index, hit the Fed’s target for the first time in a year, potentially signaling a faster increase in U.S. interest rates.
“Tough day for gold” with PCE index, the Fed’s preferred inflation barometer, rising to 2% year over year from a 1.7% pace in February, which strengthened the dollar, said Jeff Wright, executive vice president at Gold Mining Inc.
“The key to the week will be the [Federal Open Market Committee] statement on Wednesday afternoon giving clues as to direction of how many additional rate increases in 2018: two versus three as the market absorbed the rate hike in March with [an] increase in market volatility,” Wright said.
“At the end of the week will be U.S. employment data which could also impact gold,” he said. “While gold is under pressure at present, I am in opinion it holds $1,300 and will go higher toward $1,400 by year-end.”
Investors also have been tracking the 10-year Treasury yield which last week climbed above 3% for the first time since 2014, but then slipped back under that psychologically important level. A jump for that benchmark rate tends to lure money away from riskier assets such as equities.
Elsewhere in the metals complex, July silver lost 9.6 cents, or 0.6%, to $16.401 an ounce. Silver futures gained 0.8% for the month, based on the most-active contract.
July copper edged 0.45 cent, or 0.2%, higher at $3.0740 a pound, trading 1.6% higher for April.
July platinum fell $12, or 1.3%, to $904.40 an ounce, with prices down 3% in April. June palladium slipped by $2.45, or 0.3%, to $960.55 an ounce. The contract traded down about 1.8% for the month, with declines for April coming in recent sessions. U.S. tensions with Russia, which threaten global supplies, had recently fueled strong weekly gains. Last week, however, the contract tumbled by 6.5%.
The SPDR Gold Shares exchange-traded fund fell 0.4% and the iShares Silver Trust declined by 0.4%, and lost 0.7% in April, while The VanEck Vectors Gold Miners fell 2% on the session, but was 2.4%, late-afternoon Monday in New York.
—Mark DeCambre contributed to this article