Higher US dollar drags gold to more than one-month low

By Brijesh Patel

(Reuters) – Gold prices fell to a more than one-month low on Monday as a stronger dollar took the shine off bullion, while investors awaited fresh catalysts to gauge the downside after mixed U.S. inflation numbers last week.

Spot gold was down 0.3% at $1,907.40 per ounce by 02:47 p.m. EDT (1847 GMT), after hitting its lowest since July 6. U.S. gold futures settled 0.1% lower at $1,944.00.

The dollar jumped 0.3% to its highest level in over a month, making greenback-priced bullion more expensive for overseas buyers, while benchmark 10-year Treasury yields hit a nine-month high on Monday. [USD/] [US/]

“We continue to see a pretty significant decline in long exposure in gold and a significant increase in short exposure. Speculative investors are getting out of gold and interest rate expectations are a big factor here,” said Bart Melek, head of commodity strategies at TD Securities.

“Technically gold can move below the $1,900 levels here without a lot of problems. We’ve reached recent support levels and the path is quite open for gold to trend lower as short-term interest rates move higher.”

Last week, data showed U.S. consumer prices increased moderately in July. However, producer prices rose slightly more than expected, fuelling concerns that the Federal Reserve could keep rates higher for longer.

Interest rate increases tend to lift bond yields and also raise the opportunity cost of holding non-yielding bullion.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell to the lowest level since January 2020. [GOL/ETF]

The focus this week will be on U.S. retail sales data on Tuesday, followed by the minutes of the Federal Open Market Committee’s July meeting on Wednesday that could shed light on the appetite for higher rates.

Elsewhere, silver fell 0.4% to $22.57 per ounce. Platinum dropped 1.4% to $899.51, while palladium shed 2.4% to $1,262.47.

(Reporting by Brijesh Patel and Anjana Anil in Bengaluru; Editing by Nick Macfie, Sharon Singleton and Shilpi Majumdar)