Gold prices rose on Monday as the dollar slipped, but gains are expected to be capped ahead of inflation data from the United States this week that could mean U.S. interest rates increase more quickly than expected.
Spot gold was up 0.14 percent at $1,318.02 an ounce
at 8:03 a.m. EST. It has fallen more than 3 percent since hitting a
17-month peak at $1,366.07 in January. U.S. gold futures rose 0.34
percent to $1,320.20 an ounce.
Worries about inflation in the
United States surfaced after data this month showed jobs growth surged
and wages rose, bolstering expectations that the U.S. labor market would
hit full employment this year.
U.S. inflation data for January is due on Wednesday and the U.S. Federal Reserve next meets on March 20-21.
story is and will be about U.S. monetary policy and dollar direction,"
Julius Baer analyst Carsten Menke said. "U.S. growth is more solid,
wages are rising and the worry is the Fedwill be forced into more rate
hikes than currently expected."
A lower U.S. currency makes
dollar-denominated gold cheaper for holders of other currencies,
potentially boosting demand. The dollar slipped against a basket of six
major currencies as a bounce in equity markets ended a strong run for
the greenback, used by investors as a safe place to park assets in times
of financial market volatility.
"Gold has picked up a little in
the last 24 hours, as a hint of dollar weakness creeps back into
markets," said Jordan Eliseo, chief economist at gold trader ABC
Hedge funds and money managers slashed their net long
position in COMEX gold for the first time in eight weeks in the week to
Feb. 6, and cut it in silver, U.S. Commodity Futures Trading Commission
data showed on Friday.
Gold faces strong resistance at the 100-day
moving average around $1,345. A break of support at $1,300 could see
the market trying to test the 21-day moving average at around $1,275.
gained 0.34 percent to $16.408 an ounce, platinum was down 0.2 percent
$962.60 an ounce and palladium was up 0.7 percent at $983.33 an ounce.