Gold Futures Settle Higher As Dollar Slips

Gold prices climbed higher on Monday as the dollar weakened amid expectations the Federal Reserve is unlikely to aggressively hike interest rates at the upcoming meeting later this month.

Policymakers including Fed Governor Christopher Waller, as well as regional Fed Presidents Mary Daly, Loretta Mester, James Bullard, and Raphael Bostic, suggested that a 75 basis-point hike would be appropriate for this month.

Worries about inflation have faded a bit as well after a survey report from the University of Michigan last week showed inflation expectations eased to a one-year low.

The dollar index dropped to 106.89, and despite having recovered to 107.25, remains firmly down with a loss of more than 0.7%.

Gold futures for August ended higher by $6.60 or about 0.4% at $1,710.20 an ounce.

Silver futures for September ended up by $0.246 at $18.840 an ounce, while Copper futures for September settled at $3.3460 per pound, gaining $0.1120.

In U.S. economic news, the National Association of Home Builders released a report showing a substantial deterioration in U.S homebuilder confidence in the month of July.

The report showed the NAHB/Wells Fargo Housing Market Index plunged to 55 in July from 67 in June. Economists had expected the index to edge down to 66.

The HMI showed its second biggest single-month drop after a 42-point nosedive in April 2020, tumbling to its lowest level since May 2020.

Traders now look ahead to the European Central Bank’s monetary policy meeting on Thursday. The ECB is expected to hike interest rate by 25 basis points and signal a 50-basis point hike in September.

The Bank of Japan, which is scheduled to meet on Wednesday and Thursday, is expected to keep its ultra-loose money policy in place.

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