Gold prices fell by almost 0.4% after recording a third consecutive weekly increase last week and reached their highest level since May 22.
The price correction was caused by partial profit-taking and the strengthening of the US dollar. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.08% to 104.17. A stronger dollar makes gold more expensive for buyers holding other currencies.
Investors are also preparing for speeches by Fed policymakers and the publication of new data that will help clarify the prospects for monetary policy. Fed Chairman Powell will speak later today, and several other officials are due to speak later this week. As for the US data, retail sales reports, housing market statistics (building permits and housing starts), industrial production data and statistics on initial jobless claims will be presented this week. Experts warn that if retail sales data turn out to be below expectations, this will increase the likelihood of easing the Fed's monetary policy and support gold. According to the CME FedWatch Tool, markets see a 4.7% probability of a 25 basis point rate cut at the Fed meeting in July, a 94.3% probability of a rate cut in September, and a 97.9% probability of monetary policy easing in November. Non-yielding bullion's appeal tends to shine in a low interest rate environment.