By Deep Kaushik Vakil
(Reuters) – Gold steadied on Monday ahead of the U.S. Federal Reserve’s widely anticipated rate hike later this week, while bullion priced in euros rose on a deeper downturn in regional business activity.
Spot gold was mostly unchanged at $1,959.85 per ounce by 0855 GMT. U.S. gold futures for August delivery fell 0.2% to $1,962.10.
Gold prices in euros hit their highest since July 5 after data showed a much deeper-than-expected downturn in euro zone business activity in July as demand in the services industry declined while factory output fell.
The dollar index inched 0.3% higher, limiting gold’s rise as a stronger dollar makes the metal more expensive for holders of other currencies. [USD/]
Bullion mostly moved sideways, and will trade around current levels until there is further clarity from guidance in the upcoming Fed meeting’s statement, said UBS analyst Giovanni Staunovo.
The Fed will announce its interest rate decision on Wednesday, followed by the European Central Bank on Thursday, with both seen hiking rates.
Gold is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion.
“Any dovish surprise, particularly from the Fed, could be positive for gold, with good chances of seeing a new attack to the $2,000 mark,” said Carlo Alberto De Casa, market analyst for Kinesis Money, in an note.
Traders are also awaiting second-quarter U.S. GDP data on Thursday, followed by the personal consumption expenditures (PCE) index for June due on Friday. [MKTS/GLOB]
Data on Friday showed COMEX gold speculators raised their net long position by 35,288 contracts to 135,907 in the week ended July 18. [CFTC/]
Silver rose 0.3% to $24.5 per ounce, platinum was flat at $961.48 and palladium fell 0.5% to $1,283.65.
UBS analysts in a note saw platinum being under-supplied for the rest of 2023 due to substitution in autocatalysts and lower South African mine production.
(Reporting by Deep Vakil in Bengaluru; Editing by Sharon Singleton)
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