Gold gains on dollar retreat

Gold prices rose on Monday, helped by a pullback in the dollar, while investors looked forward to US inflation data due later this week that could offer more clarity on the Federal Reserve’s monetary policy.

Spot gold was up 0.3% to $2,327.63 per ounce as of 11:59 a.m. EDT (1559 GMT). U.S. gold futures rose 0.4% to $2,340.10.

The dollar fell 0.4% against its rivals, making gold attractive for other currency holders.
Gold is in consolidation mode and there is active buying on dips, said David Meger, director of alternative investments and trading at High Ridge Futures Traders, adding that they are looking for the trajectory of interest rates moving forward and the timing of those potential rate cuts.

Focus this week will on the U.S. Personal Consumption Expenditures (PCE) data, the Fed’s preferred measure of inflation, which is due on Friday.
Also on the radar, at least five Fed officials will speak this week, including San Francisco Fed

President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman.
Traders are currently pricing in a 66% chance of a Fed rate cut in September, according to CME FedWatch Tool.

“We believe gold can hit $3,000/oz over the next 12-18 months, although flows do not justify that price level right now,” BofA said in a research note.

“Achieving this would require non-commercial demand to pick up from current levels, which in turn needs a Fed rate cut to happen. An inflow into physically backed ETFs and a pick-up in LBMA clearing volumes would be an encouraging first signal.”

Lower rates reduce the opportunity cost of holding bullion.

Elsewhere, spot silver eased 0.2% to $29.48 per ounce and platinum gained 0.6% to $998.70.

Palladium climbed 2.3% to $970.75. In the previous session, prices hit a one-month high and breaking above the key level of $1,000 per troy ounce in volatile trade as some investors covered their short positions and the market was tight for nearby physical supply.