Spot Gold hovers above 15-week low as dollar and bond yields rise

Key points

Spot Gold edged lower on Monday on firmer US Dollar and higher US bond yields, as this week’s focus sets on the minutes of the Federal Reserve June meeting and US Non-Farm Payrolls report.

According to Carlo Alberto De Casa, external analyst at Kinesis Money, the slight drop in Gold prices was due to the risk-on mood in the market.

The yellow metal could continue trading within the $1,900-$1,930 range before the FOMC minutes release on Wednesday, De Casa noted.

Markets are now pricing in an 89% chance of a 25 basis point interest rate increase at the Fed’s meeting in July, according to CME’s FedWatch tool.

Friday’s data on US employment will be closely watched, because another report indicating a resilient jobs market could support the case for more policy tightening by the Fed.

Rising interest rates tend to weigh on the yellow metal’s appeal, as they translate into a higher opportunity cost of holding Gold.

US 10-year Treasury Note yield was last at 3.852%, after hitting 3.886% on Friday – the highest level since March.

As of 12:22 GMT on Monday Spot Gold was edging down 0.28% to trade at $1,914.24 per troy ounce. Last week, the precious metal went down as low as $1,893.07 per troy ounce, which has been its weakest price level since March 15th ($1,885.79 per troy ounce).

Gold Futures for delivery in August were losing 0.39% on the day to trade at $1,921.95 per troy ounce, while Silver Futures for delivery in September were down 0.12% to trade at $22.992 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.20% to 103.126 on Monday. Last Friday, the DXY went up as high as 103.543, which has been its strongest level since June 13th (103.624).