Gold stuck in tight range as investors focus on US CPI report

Key points

Spot Gold remained confined within a tight trading range on Monday after a sharp gain witnessed last Friday, as the US Dollar firmed, recouping part of Friday’s losses.

Market players looked to the US CPI inflation report for more clues over the Federal Reserve’s tightening cycle after the almost-certain July hike.

“Bullion’s knee-jerk spike on Friday has been swiftly tapered by the notion that this latest U.S. jobs report won’t yet allow the Fed to halt its rate hikes,” Exinity Chief Market Analyst Han Tan was quoted as saying by Reuters.

Friday’s employment data showed the slowest US jobs growth since December 2020. Yet, wage growth remained strong, indicating a still-tight labor market.

“If the incoming core U.S. CPI print (on Wednesday) lays bare still-stubborn inflationary pressure, that may prompt bullion bears to push the precious metal into sub-$1,900 waters, provided markets ramp up bets for yet another Fed rate hike after July,” Tan said.

Rising interest rates tend to weigh on the yellow metal’s appeal, as they translate into a higher opportunity cost of holding Gold, which pays no interest.

As of 12:25 GMT on Monday Spot Gold was edging down 0.36% to trade at $1,918.62 per troy ounce. Last week, the precious metal went up as high as $1,935.05 per troy ounce, which has been its strongest price level since June 23rd ($1,937.31 per troy ounce).

Gold Futures for delivery in August were losing 0.47% on the day to trade at $1,923.45 per troy ounce, while Silver Futures for delivery in September were down 0.64% to trade at $23.140 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.14% to 102.405 on Monday. Last Friday, the DXY went down as low as 102.226, which has been its weakest level since June 22nd (101.921).