Gold prices steady as dollar retreats; Fed rate path in focus

Gold was steady on Monday as the dollar pulled back, although bullion’s appeal was limited after U.S. business activity data last week backed expectations of a 25-basis-point interest rate hike by the Federal Reserve at its May meeting.

FUNDAMENTALS

Spot gold held its ground at $1,983.68 per ounce, as of 0107 GMT, after slipping 1% on Friday. U.S. gold futures edged 0.2% higher at $1,993.30.

The dollar index was down 0.1%, making gold more affordable for buyers holding other currencies.

Gold prices on Friday were pressured by surveys that showed U.S. and euro zone business activity gathered pace in April, despite central bankers signalling they are nearing the peak of their interest rate-hiking cycles designed to cool demand enough among consumers to bring high inflation down.

Federal Reserve Governor Lisa Cook said on Friday the outlook for the next stage of central bank monetary policy has grown less clear after the institution has taken appropriately aggressive steps over the last year to lower price pressures.

The CME FedWatch tool shows that markets are pricing in an 89.1% chance of a 25-basis-point hike by the Fed at its May 2-3 meeting.

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