Gold prices slipped on Monday as the dollar and Treasury yields gained following a higher-than-expected uptick in U.S. retail sales in March, feeding apprehensions that the Federal Reserve could delay cutting interest rates this year.
Spot gold eased 0.5% at $2,332.97 per ounce as of 10:18 a.m. ET (1418 GMT).
The dollar rose 0.1% and 10-year Treasury yields hit a five-month high after data showed U.S. retail sales increased more than expected in March, further evidence that the economy had ended the first quarter on solid ground.
“I don’t think gold’s rally is over by any means as market expectations of rate cuts is still there,” said Daniel Pavilonis, senior market strategist at RJO Futures.
The market is now pricing in fewer than two 25-basis-point cuts by the year-end, after previously expecting three.
Gold prices hit a record high of $2,431.29 on Friday in anticipation of Iran’s retaliatory attack against Israel.
Iran launched explosive drones and missiles late on Saturday in the first attack on Israel by another country in more than three decades, stoking fears of a broader regional conflict.
“The latest run-up in gold had to do with geopolitics. However, in the near-term, gold prices could fall towards $2,200 as the geopolitical premiums get washed out,” Pavilonis said. Central bank buying has also lent support to bullion.
“It is unlikely that there will be a wholesale reversal to net selling in the near term despite the record gold price, as central bank buying tends to be strategic and insensitive to the price,” analysts at Heraeus said in a note.
Meanwhile, spot silver rose 1.3% to $28.23 after hitting a nearly three-year high in the previous session.
“Both industrial demand – mainly from solar PV manufacturing – and institutional investing appear to be supporting” silver, Heraeus analysts said.
Platinum fell 1.1% at $963.40 and palladium lost 2.4% to $1,024.37.
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