World gold prices continued to face pressure in the first trading session of the week as investors increased bets that the US Federal Reserve (Fed) would maintain a tight monetary policy for longer to cope with inflation risks. Selling pressure appeared in the context of bond yields and the USD simultaneously rising.
As of 15:58 PM Vietnam time, spot gold prices fell 0.31% to 4,075.02 USD/ounce. US gold futures for August delivery also fell 0.72%, to 4,083.97 USD/ounce.
Expectations that the Fed will maintain high interest rates increased after the market continued to assess the impact of energy prices on inflation. According to the CME FedWatch tool, the probability of the Fed raising interest rates in the September meeting has increased to about 72%, compared to about 63% last week.
The minutes of the Fed's June meeting also show that policymakers are still paying great attention to inflation risks, although the US labor market has shown signs of cooling down.
The June jobs report showed that the US economy created 57,000 jobs, much lower than market expectations. At the same time, two months ago's data was adjusted down to a total of 74,000 jobs, while the unemployment rate remained at 4.2%.
However, these signals are not enough to diminish expectations that the Fed will soon ease monetary policy as inflationary pressure is still considered noteworthy.
Besides the monetary policy factor, the market is also monitoring developments in the Middle East. According to international news agencies, tensions between the US and Iran continue to make the market worried that energy supplies may be affected, thereby supporting oil prices and pulling US government bond yields up.
The yield on 10-year term bonds is currently maintained at around 4.55%, the yield on 2-year term is above 4.20%, while the Dollar Index fluctuates around 100.87 points. These are all factors that reduce the attractiveness of gold.
In addition, data from COMEX shows that hedge funds reduced 1,964 net buying contracts in the week ending July 7, bringing total net buying positions to 114,854 contracts after three consecutive weeks of increase.
This week, the market will focus on a series of important US economic data such as CPI, PPI, retail sales and a hearing before Congress by Fed Chairman Kevin Warsh to seek further signals on the monetary policy roadmap.
On the market, other precious metals also simultaneously decreased in price. Spot silver lost 1.82%, down to 58.77 USD/ounce; platinum decreased by 0.5%, to 1,619.72 USD/ounce; while palladium decreased by 1.5%, down to 1,257.82 USD/ounce
