LONDON: Gold edged lower on Monday, after posting its biggest weekly percentage increase in nearly two years, as the dollar rose ahead of US retail sales data that could fuel concerns over the Federal Reserve's stimulus plans.
Gold rose to a near three-week high after Fed Chairman Ben Bernanke said last week that a highly accommodative policy was needed for the foreseeable future, which supports a low interest rate environment that increases gold's attractiveness.
But expectations remained in place that the Fed will start slowing the pace of its $85 billion of monthly bond purchases by the end of the year.
"There is expectation that US retail sales may be a fairly good number following the steady improvement we have seen in the past few months, which of course could add to the picture that will impact on the Fed's decision to taper stimulus," Danske Bank analyst Christin Tuxen said.
Spot gold fell 0.1 percent to $1,282.90 an ounce by 0945 GMT after advancing nearly 5 percent last week, the most since October 2011.
US gold futures for August gained $3.40 to $1,281.20.
In wider markets, European shares rose and benchmark US 10-year Treasury yields steadied at 2.6 percent. The dollar partially recovered from its losses last week, making dollar-denominated gold more expensive for holders of other currencies.
Another focal point for the week is Fed Chairman Ben Bernanke's testimony before Congress on Wednesday and Thursday.
"The main focus is Bernanke's testimony to the Congress, and that should really give us more guidance to whether tapering will start in September or December," Tuxen said.
"Gold will be very sensitive to that to what happens to the euro/dollar after that and to Treasury yields as well."
Investors were also mulling the impact of Chinese GDP data for the second quarter, which matched expectations at 7.5 percent, while other figures showed a healthy rise in retail sales.
Comments
Comments are closed.