Gold prices moved lower on Monday, giving up earlier gains as the U.S. dollar found support ahead of this week’s Federal Reserve minutes.
Investors are waiting for the release of the minutes from the Fed’s June policy meeting, which could offer more clues about the future path of interest rates.
Spot Gold Retreats From Two-Week High
By 09:02 ET, spot gold was down 0.7% at $4,146.67 per ounce.
Earlier in the session, gold had climbed to a two-week high of $4,202.13 per ounce.
Meanwhile, U.S. gold futures for August delivery rose 0.8% to $4,157.70 per ounce.
Stronger Dollar Pressures Gold
The recovery in the U.S. dollar weighed on gold prices.
A stronger dollar usually makes gold more expensive for overseas buyers. This can reduce demand for the precious metal.
The move came even after investors lowered expectations for an immediate Fed rate hike following weaker-than-expected U.S. payrolls data last Thursday.
ING Says Jobs Data Did Not Hit Dollar Hard
Analysts at ING said the softer U.S. jobs report had not caused major damage to the dollar.
They noted that short-term U.S. interest rates have largely held onto their gains from April.
This helped support the greenback and limited gold’s upside.
Fed Minutes in Focus
Markets are now focused on Wednesday’s release of the minutes from the first Fed policy meeting under new Chair Kevin Warsh.
At the June meeting, the Federal Reserve kept interest rates unchanged.
However, official projections suggested that rates could still rise before the end of 2026 if policymakers remain concerned about energy-driven inflation.
Fed Message Could Stay Hawkish
Warsh has said he does not want the Fed to give traders direct forward guidance on interest rates.
Because of this, ING analysts expect the Fed minutes to be much shorter and more limited than usual.
Still, they believe the main message could remain hawkish. The Fed is expected to emphasize its commitment to restoring price stability after missing its 2% inflation target for several years.
Higher Rates Weigh on Gold Appeal
Higher interest rates can help reduce inflation. However, they can also slow broader economic activity.
For gold, higher rates are usually a negative factor. Gold does not pay interest, so rising yields can make government bonds more attractive by comparison.
This has reduced some of gold’s appeal this year and pushed prices well below the record highs reached in January.
