On Monday, gold prices increased, aided by a minor retreat in the value of the United States dollar and as investors reduced their wagers on a 100-basis-point interest rate rise by the Federal Reserve this month.
After reaching its lowest point in almost a year’s worth of trading last week, spot gold prices have since rebounded, up 0.4 percent to $1,713.49 per ounce at 0254 GMT. Gold futures in the United States rose by 0.5 percent to $1,711.80 per ounce.
The value of the United States Dollar decreased by 0.1 percent in relation to its competitors, moving further away from a near 20-year high that was reached the previous week. This caused purchasers holding other currencies to pay a lower price for gold priced in dollars.
“After Friday’s University of Michigan inflation component came in lower, the market walked back the notion of a 100-bp rate rise,” said Stephen Innes, managing partner at SPI Asset Management.
The results of a preliminary poll of consumers conducted by the University of Michigan for the month of July indicated that consumers expect inflation to run at 2.8 percent over a five-year horizon. This figure is the lowest it has been in a year and is down from 3.1 percent in June.
“Central bank hawkishness has already been priced in,” and because gold maintained its position at $1,700 per ounce over the past week, “we may see shorts get squeezed a bit,” because hawks may be disappointed that the Federal Reserve will only hike interest rates by 75 basis points the following week.
In order to offset the rapidly rising price of goods and services, Fed policymakers sent signals on Friday that they would maintain their plan to raise interest rates by 75 basis points at their meeting on July 26 and 27.
At the policy meeting that will take place later this week, the European Central Bank is anticipated to increase interest rates by 25 basis points.
The allure of bullion, which does not provide interest income, is diminished as interest rates rise because of the perceived value of gold as a hedge against inflation.
Market players are waiting to see, among other things, if Russia would restore the flow of gas via the Nord Stream 1 pipeline on July 21. This is in addition to waiting for important central bank meetings.
On Friday, the holdings of SPDR Gold Trust, the biggest gold-backed exchange-traded fund in the world, were reported to have decreased by 0.3 percent to a total of 1,014.28 tonnes.
Aside from that, the price of an ounce of spot silver increased by 0.4 percent to $18.76, the price of an ounce of platinum increased by 0.8 percent to $857.30, and the price of an ounce of palladium increased by 2.2 percent to $1,869.10.