0
98
Gold rose on Monday as a retreat in
the U.S. dollar helped to tempt back
some buyers after the previous
session's 1.3 percent slide, but moves
were muted ahead of a Federal
Reserve policy meeting this week.
The Fed is not expected to raise
interest rates at its April 26-27
meeting, but markets will be looking
for the U.S. central bank's take on the
global economy and its monetary
policy outlook.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as
bullion, while boosting the dollar, in which it is priced.
Spot gold was at $1,237.11 an ounce at 1340 GMT, up 0.4 percent, while U.S. gold futures for June delivery
settled up 0.8 percent at $1,240.20.
Prices are up nearly 17 percent this year as expectations of a Fed rate increase faded, the dollar softened
and investors showed renewed interest in commodities.
"It all depends on the Fed for the time being," Julius Baer analyst Carsten Menke said. "Inflows into
exchange-traded products have really leveled off in the second half of March and into April."
Global stocks, the dollar and oil prices fell as an unexpected drop in U.S. new home sales added to investor
uncertainty over the economy's outlook ahead of U.S. and Japanese central bank policy meetings.
"We're in this narrow band somewhere between $1,200 and $1,250. The market is really looking for
guidance here," said Stefan Wieler, vice president of GoldMoney in Toronto.
"The gold market has anticipated that real interest rates move lower."
Economists expect the Fed to deliver a rate increase in June and follow up with another by the end of the
year. But interest rate futures show less conviction, underscoring the wide gap between markets and
policymakers on the path of rates.
Speculators continue to bet on rising gold prices, with Friday's data showing that hedge funds and money
managers raised their net long COMEX gold position to a 3-1/2-year high.
"With expectations of a Fed hike in the next six months already low, the market already heavily long and
physical demand muted, we see little reason to jump in and buy gold here," ICBC Standard Bank said in a
note.
Among other precious metals, silver, which touched an 11-month high as it rallied 4.5 percent last week,
was up just 0.1 percent at $16.95 an ounce.
Platinum was up 0.6 percent at $1,012.13 and palladium gained 0.1 percent to $600.95