Gold, on Monday, June 19, edged lower to touch a near four-week low as the dollar held firm, with the market waiting on comments from a top U.S. Federal Reserve official after last week’s soft economic data.
Spot gold was down 0.3 per cent to $1,249.61 per ounce, as of 0804 GMT. During the session, it hit $1,248.63, its lowest since May 24. U.S. gold futures for August delivery fell 0.4 per cent to $1,251 an ounce.
Spot gold is expected to drop to $1,243 per ounce, as suggested by its wave pattern and a Fibonacci projection analysis, according to Reuters technicals analyst, Wang Tao.
Gold is likely to be tested on the downside for at least the first half of the week, Alex Thorndike, a trader at MKS PAMP Group, said in a note.
New York Fed President William Dudley, a close ally of Fed Chair Janet Yellen, is due to take part in a roundtable with local business leaders in Plattsburgh, New York.
“If Dudley confirms that the Fed will remain hawkish towards interest rate hikes, I do not think gold will be able to recover anytime soon,” said Argonaut Securities analyst Helen Lau.
Although the Fed raised rates last week, weaker economic data has cast doubts over the central bank’s ability to pursue an aggressive monetary policy for the rest of the year.
U.S. homebuilding fell for a third straight month in May to the lowest level in eight months as construction activity declined broadly, suggesting that housing could be a drag on economic growth in the second quarter.
Higher interest rates tend to boost the dollar, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
In wider markets, the dollar was steady against a basket of currencies on Monday, and Asian stocks rose, shaking off Wall Street’s uninspiring performance on Friday.
Among other metals, spot palladium climbed 0.8 per cent to $867.20, and platinum slipped 0.5 per cent to $921.95 per ounce.
Silver edged 0.1 per cent down to $16.57 per ounce. Earlier in the session, it touched $16.57, its weakest since May 19.
