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Gold drops as US Dollar regains its footing. Heads for first monthly gain since five

Gold drops as US Dollar regains its footing. Heads for first monthly gain since five
Gold drops as US Dollar regains its footing. Heads for first monthly gain since five

Gold fell more than 1% on Friday as the U.S. dollar gained ground. The dollar recovered its footing but was still on course to post its best monthly gain since February, as investors reduced their rate hike bets following the Federal Reserve meeting last week.

Spot gold fell 1.1%, to $4.055.41 an ounce at 1050 GMT. However, it was on track for a 0.5% weekly increase. Prices have also risen by about 1.7% this month.

U.S. Gold Futures for August Delivery dropped by 1.2% to $4053.60.

Independent analyst Ross Norman stated that "gold struggles to gain meaningful momentum and is still in the corrective stage of a larger structural bull market."

The dollar index has recovered modestly above the key 100 level after its sharp sell-off post-FOMC, taking some shine off gold today."

The dollar gained 0.3% on Friday after losing 2.4% in one day, its largest drop since January 2023. The dollar's strength makes gold more expensive for those who hold other currencies.

Kevin Warsh, U.S. central Bank chief, vowed that he would bring down inflation at the Fed's policy meeting on Wednesday. This left markets "confused".

According to the CME FedWatch Tool, traders now price in a 67% probability of a September rate hike, as opposed to an 80% likelihood a week ago.

The data released on Thursday shows that U.S. inflation rates slowed down in June, but this was probably only a temporary easing as the oil price rose due to renewed hostilities across the Middle East.

The rise in energy prices has exacerbated inflation fears and reinforced expectations that U.S. rates will be higher, reducing the appeal of non-yielding gold.

Gold demand in India was muted as buyers awaited a clearer direction of price, while a stronger Yuan boosted purchases?in the top consumer China.

Silver spot fell by 1.7%, to $58.00 an ounce.

Palladium fell 1.1%, to $1289.77. Platinum dropped 1.3%, to $1638.77. Both metals are headed for monthly gains. (Reporting by Sukanya Mitra in Bengaluru; additional reporting by Swati Verma; Editing by Diti Pujara)

(source: Reuters)