By Barani Krishnan
Investing.com -- A few dollars here and a few dollars there: gold continued with its delicate dance on Monday, moving marginally despite utter silence from the Federal Reserve after the relative din of the past two weeks on the possibility of a super-sized rate hike for July.
With the central bank observing its typical ‘blackout’ period for comments ahead of its July 27 decision on rates, gold longs and shorts were both left to their devices on deciding how to move forth.
An unusually light week for U.S. economic data also left flows more to the discretion of traders.
In the end, the Dollar Index’s sharpest one-day tumble since mid-June helped decide the direction in the favor of longs, though the move up itself was barely anything to shout about.
The most-active gold futures contract on New York’s Comex, August, settled up $6.60, or 0.5%, at 1,710.20 an ounce.
August gold lost 2.2% last week after plumbing a 27-month low of $1,695 on Thursday.
The U.S. gold benchmark had fallen straight in five previous weeks, losing a cumulative 9%. Year-to-date, it is down 7%.
Since the Consumer Price Index for the year to June came in on Wednesday at a new four-decade high of 9.1%, bets on rates have been volatile — with the pendulum swinging between an unprecedented increase of 100 basis points for July versus the broader consensus for a 75-basis point hike.
Until Monday, the dollar had repeatedly hit two-decade highs as well, dealing a severe blow to demand from oil buyers using currency other than the greenback.
“The dollar is weakening to start the trading week, but this might not be the top, which means gold might struggle to make a move above anywhere close to the $1750 level,” said Ed Moya, analyst at online trading platform OANDA.
If gold manages to break out above $1745, it could extend towards $1770-$1,800 and $1,815, said Sunil Kumar Dixit, chief technical strategist at skcharting.com.
“As an erstwhile safe haven, gold is not out of the woods yet and its doors remain open for another break below $1,700, aiming this time for $1683-$1,666-$1,652,” Dixit added.