Gold prices dip as dollar claws up, equities firm dimming metal's appeal

Gold prices eased on Monday as a slightly stronger dollar and buoyant equities dimmed the safe-haven metal's appeal, with investors awaiting US inflation data and Fed Chairman testimony this week

By Eileen Soreng

(Reuters) - Gold prices eased on Monday as a slightly stronger dollar and buoyant equities dimmed the safe-haven metal's appeal, with investors awaiting U.S. inflation data and Federal Reserve Chairman Jerome Powell's testimony this week.

Spot gold fell 0.2% to $1,803.56 per ounce by 0341 GMT. U.S. gold futures were 0.4% lower at $1,803.9.

"There could be reduced demand for safety and hedge against market volatility," said Margaret Yang, a strategist at DailyFX.

However, the near-term trend for gold seems to be biased towards the upside, with the immediate resistance at $1,815 and support at around $1,790, Yang added.

Asian shares rallied after Wall Street posted record closing highs on Friday, while the dollar index inched 0.1% higher.

Gold's decline was however capped by lingering concerns over the highly contagious Delta variant of the coronavirus that could hamper the pace of global economic recovery.

Also suggesting a bumpy road to recovery, China decided on Friday to give its economy a 1 trillion yuan ($154 billion) boost.

Market participants now await U.S. data including consumer price index on Tuesday, and Powell's testimony on Wednesday and Thursday for cues on policy tightening by the central bank.

A surprise hawkish tilt by the Fed had sent gold in June to its worst month since 2016.

Higher interest rates increase the opportunity cost of holding bullion, which pays no interest.

Among other precious metals, silver fell 0.2% to $26.03 per ounce, palladium was down 0.3% to $2,800.58 and platinum dipped 0.7% to $1,095.80.

 

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu)