AMSTERDAM/LONDON: Gold eased on Monday as a firm dollar weighed, although bullion traded in a tight range as investors remained on the sidelines given the US Federal Reserve’s mixed signals on policy tightening.
Spot gold was 0.2% lower at $1,775.64 per ounce by 1215 GMT. US gold futures were down 0.1% at $1,775.70.
“Gold is suffering from a period of confidence crisis ... struggling to challenge back towards the $1,800 level,” Saxo Bank analyst Ole Hansen said.
“The market seems to be quite clearly buying into the US central bank’s view that inflation is transitory and there’s no need to worry about the prolonged period of inflation.”
Gold suffered its biggest daily drop in five months after the Fed signalled earlier than expected policy tightening on June 16. However, Fed Chair Jerome Powell has said inflation would not be the only determinant in interest rate decisions. Meanwhile, US consumer spending paused in May, with the Fed’s main inflation measure rising by the most in 29 years. Gold prices rose as much as 0.8% on Friday after the data.
The dollar index gained 0.2% on Monday, making bullion less affordable for other currency holders.
“Fed officials seem fairly keen to downplay the risks of persistent inflation.
As a consequence of that, gold prices are trading in a no man’s land,” Michael Hewson, chief market analyst at CMC Markets said.
“The market can’t second guess the Fed (on inflation) ... they are going to wait for Friday’s payrolls.”
The US Labor Department is expected to announce that nonfarm payrolls increased to 675,000 in June, after rising 559,000 in May.
Among other precious metals, silver eased 0.2% to $26.02 per ounce, platinum slid 1.2% to $1,098, and palladium gained 0.2% to $2,642.17.