Mubasher: Gold prices declined on Monday, having earlier firmed after touching their highest level in one week in the prior session, Reuters reported.
This came as market participants wagered that the US Federal Reserve might lower interest rates this year after recent data indicated that inflation is losing momentum.
By 8:09 am GMT, spot gold declined by 0.36% to $1,281.59 per ounce after scoring $1,288.59 per ounce, the highest since 16 April, while US gold futures fell by 0.42% to $1,283.40 per ounce.
Lower Fed interest rates tend to drag the dollar and bond yields down, rendering the greenback-denominated gold more affordable for holders of non-US currencies, while they also makes non-yielding assets more attractive for investors.
At 8:11 am GMT, the US dollar index, which gauges the greenback against a basket of six major rivals, ticked down 0.02% to 97.9820.
“The gross domestic product (GDP) figures that came out in the United States, cast some doubt on the state of its economy and the strength of the US consumer,” leading some investors to project a rate cut from the central bank, IG Markets analyst Kyle Rodda was quoted by Reuters.
The US economy grew at 3.2% during the first quarter of this year, fostered by a shrinking trade deficit and the biggest accumulation of unsold merchandise since 2015.
Core personal consumption expenditure price index, the Fed’s favourable gauge of inflation, rose only at 1.3% in the first quarter, compared with 1.8% in the preceding quarter.
“The Fed is likely to wait until after the summer before signalling a rate cut, but if they are overly concerned with tame inflation, they could tee up a cut for the end of the year,” a note by OANDA senior market analyst Edward Moya was quoted.