Gold prices edged lower on Monday, slipping below the $1,720 per ounce key level. If gold prices decline, support may be found at $1,675 per ounce, while resistance may be found at around 1,813 per ounce and higher up at $1,870 per ounce.
The dollar continued to retreat on Monday, with the dollar index falling below the 106.5 level. Increased risk appetite on Monday pushed both the safe-haven dollar and gold down, while riskier assets benefitted.
US Bond yields remained steady on Monday, with the US 10-year treasury note at approximately 2.8%. Real yields compete directly with gold, which is a non-interest-bearing asset, and their decline benefits gold prices.
An increasing number of major Central Banks are moving towards a tighter fiscal policy putting pressure on the gold price, as interest rate assets become a comparatively more appealing investment. The Bank of Canada hiked its interest rate by 100 base points and the ECB unexpectedly raised interest rates by 50 bps last week, dampening the appeal of gold. The BOE is also moving in a more hawkish direction, reportedly considering a rate hike of up to 50 bps in August.
The primary driver of gold price this week is expected to be the much-anticipated Fed meeting on the 27th, with a Fed rate hike of at least 75 bps being priced in by markets.
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