Gold price retreats as markets wait for Fed minutes

Gold price at lowest in over three weeks, markets wait for U.S. inflation data 

The price of gold saw a decline on Monday, influenced by an uptick in U.S. Treasury yields. Investors are eagerly awaiting the release of the minutes from the Federal Reserve's recent meeting, seeking insights into the central bank's trajectory for interest rates. 

As of 15:50 GMT (1050 ET), spot gold was down 0.4% at $1,972.60 per ounce, having reached as high as $1,993.29 on Friday. U.S. gold futures also fell 0.5% to $1,975.00. 

"Technically we've seen gold hit resistance and is back to range bound trading with somewhat higher rates as a catalyst here," Bart Melek, head of commodity strategies at TD Securities, told Reuters correspondent Anjana Anil on Monday. 

Analysts anticipate the Fed to maintain its stance of monetary policy decisions hinging on inflation, in addition to its commitment to keeping rates "higher for longer”. 

The release of the Fed meeting minutes is scheduled for Tuesday. Last week's data raised expectations that the Fed might initiate monetary easing sooner than anticipated, given a slowing job market and a CPI inflation reading below expectations. 

Lower interest rates tend to suppress the dollar and bond yields, making non-yielding bullion more attractive. However, analysts at Kitco Metals noted that precious metals bulls are currently lacking momentum and require fresh, fundamental drivers. 

Despite a lower U.S. dollar and higher crude oil prices, rising U.S. Treasury yields are overshadowing gold and silver buyers, keeping them cautious, according to industry website Kitco. The U.S. dollar index slipped 0.4% to a more than 2.5-month low on Monday, limiting the losses for gold. 

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Gold price forecast: Downside for yellow metal may be opening up 

In a gold price forecast issued on Monday, analysts at TD Securities said that XAU/USD may be opening up to downward movement: 

“The door for some downside in gold prices may be finally opening up, as our advanced positioning analytics suggest that upside flows have now peaked. We now estimate that without a decisive break north of $2,000, trend follower buying activity will likely grind to a halt.  

A meaningful deterioration in US data may increasingly create headwinds for the bears, but the scope for tactical downside is growing nonetheless.” 

A recent gold price forecast from ANZ Bank said it expected gold to trade in the $1,930-$2,000 range in the near term. If the commodity maintains within those boundaries, “the bullish trend will remain intact,” ANZ’s analysts wrote last week. 

At the time of writing on Monday, the front-month gold futures contract on the NYMEX traded around the $1,976 mark, as per MarketWatch data.  

Despite the recent decline, the price of gold remains close to 8.5% up year-to-date.  

When considering gold and other commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.