Gold prices flat on Monday

Gold prices were flat on Monday as investors traded cautiously ahead of U.S. inflation data expected later this week to gauge the impact of interest rate hikes and if more policy tightening was on the cards.

Spot gold was little changed at $1,923.69 per ounce by 1144 GMT. U.S. gold futures were down 0.2% to $1,929.10.

“Bullion’s knee-jerk spike on Friday has been swiftly tapered by the notion that this latest U.S. jobs report won’t yet allow the Fed to halt its rate hikes,” Exinity Chief Market Analyst Han Tan said.

Last week’s employment report showed the U.S. economy added the fewest jobs in 2-1/2 years in June, but persistently strong wage growth pointed to still-tight labour market conditions.

“If the incoming core U.S. CPI print (on Wednesday) lays bare still-stubborn inflationary pressure, that may prompt bullion bears to push the precious metal into sub-$1,900 waters, provided markets ramp up bets for yet another Fed rate hike after July,” Tan added.

Bullion prices have dropped over 7% since reaching near-record levels in early May as investors scaled back expectations of an end to the Fed’s rate-hiking cycle.

Gold prices are highly sensitive to higher interest rates as they dampen the appeal of bullion, which pays no interest, while a stronger dollar also makes it less attractive for overseas investors.

“Gold prices seem to be in a range for now between $1,900 and $1,940 an ounce, with the potential for further upside likely to be dictated by U.S CPI numbers,” Michael Hewson, chief market analyst at CMC Markets said.

Elsewhere, the Bank of Canada is heading toward a second consecutive quarter-point interest rate hike on Wednesday after a month of economic data revealed resilient growth.

In other precious metals, spot silver was steady at $23.06 per ounce, platinum rose 1.1% to $918.46, while palladium fell 0.1% to $1,242.73.