Gold declines due to a modest dollar increase

17 Jul 2023 , 12:32 PM

As the dollar became stronger on Monday, gold prices inched lower, and investors mainly bet that the U.S. Federal Reserve would soon stop raising interest rates.

Spot gold was down 0.1% at $1,952.58 per ounce. To $1,957.20, U.S. gold futures were down 0.4%.

The dollar increased slightly from its lows in April 2022, increasing the price of gold for owners of other currencies.

On hopes that the Federal Reserve was close to finishing its monetary tightening cycle, gold increased 1.6% for the week ended July 14, its largest weekly gain since April.

Consumer prices increased at their slowest rate in more than two years, producer inflation increased at its smallest rate in nearly three years, and consumer sentiment increased to its greatest level in over two years, according to data released last week in the United States.

The Federal Open Market Committee (FOMC) is expected to raise rates again during its meeting on July 25–26, according to interest rate futures, with rate reduction anticipated in 2024. The opportunity cost of owning non-yielding bullion is reduced as interest rates decline. 

Fed Governor Christopher Waller, meanwhile, stated on Thursday that he was not yet prepared to declare an end to inflation and that he prefers rate increases this year, a position echoed in the June FOMC minutes.

A number of Chinese economic indicators will be announced on Monday; it is anticipated that they will show that the post-pandemic recovery is evaporating, which will increase expectations for additional stimulus measures.

Silver prices on the spot market down by 0.2% to $24.89 per ounce, while palladium and platinum prices decreased by 0.5% each to $966.88 and $1,265.07, respectively.

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