Gold Eases from Two-week High as Firmer US Dollar Weighs

Gold prices retreated from a two-week peak on Monday, pressured by a firmer US dollar, though receding expectations of aggressive Federal Reserve interest rate hikes provided some support. Spot gold dipped 0.4% to $4,160.33 per ounce, after earlier reaching its highest level since June 22. US gold futures for August delivery, however, climbed 1.1% to $4,172 per ounce.

Analysts note that a resilient US dollar continues to act as a headwind for bullion. "Gold continues to face headwinds from a resilient US dollar," said Tim Waterer, chief market analyst at KCM Trade. Investors are now keenly awaiting this week's FOMC Meeting Minutes, seeking clearer indications of the Federal Reserve's monetary policy stance. The market will be looking for consensus on whether committee members lean towards a hawkish outlook or a more dovish sentiment.

The dollar's modest 0.1% gain made dollar-denominated gold more expensive for holders of other currencies. Last week, gold saw a significant rebound, gaining over 2% and breaking a four-week losing streak. This rally was fueled by softer-than-expected US payroll data, which eased concerns about persistent inflation and the likelihood of higher interest rates. Data released Thursday revealed a sharp slowdown in US job growth in June, with prior months' gains revised downward, suggesting a cooling labor market and prompting traders to scale back expectations for an imminent Fed rate hike. Currently, traders estimate approximately a 55% chance of a rate increase in September, down from over 60% before the jobs data.

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Gold continues to face headwinds from a resilient US dollar.