Gold is close to a three-month low as the dollar continues to do well.
(Reuters) – Gold prices went down in choppy trading on Monday because a strong dollar hurt demand for the metal, which is priced in dollars, and put it on track for a more than three-month low hit the day before.
But a drop in the benchmark 10-year U.S. Treasury yields kept losses in zero-yield gold to a minimum. This helped keep prices above the important psychological support level of around $1,800 per ounce.
As of 5:39 GMT, spot gold was down 0.1% to $1,808.61 per ounce. Gold futures in the U.S. fell by 0.2% to $1,804.80.
“Because $1,800 is such a big round number, it makes sense that it would offer some support as some traders try to be brave and buy a dip and others close out profitable shorts,” said Matt Simpson, a senior market analyst at City Index.
Gold prices fell for the fourth week in a row on Friday, dropping more than 1 percent to $1,798.86 per ounce before ending the day at $1,811.15.
“But right now, things don’t look good for gold bugs. Even if there is a bounce from $1,800, the momentum clearly points toward a further drop “Simpson said.
Concerns about the growth of the world economy helped the dollar start the week close to a 20-year high against its peers. This made gold, which is also seen as a safe haven, less appealing to buyers with other currencies.
Loretta Mester, president of the Cleveland Fed, said on Friday that inflation will need to go down for “several months” before the Federal Reserve can be sure that it has reached its peak. If the data don’t improve by the September Fed meeting, she said, she would be willing to consider faster rate hikes.
Even though gold is thought of as a hedge against inflation, it is sensitive to rising short-term interest rates and bond yields in the U.S. This makes the opportunity cost of holding bullion go up.
Spot silver went down 0.2% to $21.03 per ounce, platinum went up 0.1% to $939.70 per ounce, and palladium went up 0.6% to $1,955.59 per ounce.