Investing.com - Gold prices extended early losses on Monday, falling to fresh five-week lows pressured lower by the stronger dollar and easing geopolitical tensions.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange were down $9.90 or 0.75% to $1,313.60 a troy ounce by 09:18 AM ET (13:18 GMT), the lowest level since March 21.
The dollar moved higher, regaining ground after Friday’s pullback from three-and-a-half month peaks. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.39% to 91.66.
A stronger U.S. currency makes dollar denominated gold more expensive for overseas buyers.
The dollar index climbed 1.37% last week, boosted by rising U.S. yields and the prospect of a faster pace of rate hikes by the Federal Reserve this year.
The yield on 10-year U.S. Treasury notes rose above the psychologically important 3% level for the first time since 2014 last week, amid rising inflation expectations. The yield subsequently backed off that level and was last at 2.957%.
The recent rise in Treasury yields has stoked investors’ worries about higher interest rates, which tend to make non-yield bearing gold less attractive to investors.
Investors were turning their attention to a Federal Reserve meeting and the nonfarm payrolls report for April later this week, which could underpin dollar strength.
The Fed is unlikely to raise rates at the conclusion of its two-day meeting on Wednesday after a hike in March, but the central bank’s statement will be closely watched amid speculation over whether it will raise rates four times this year, rather than the three signaled by policy makers.
Meanwhile, safe haven demand for the gold faded as geopolitical tensions in the Korean peninsula eased.
In other precious metal trade, silver futures dropped 1.44% to $16.17 a troy ounce, while platinum futures were down 1.24% to $905.00.
Among base metals, copper futures were down 0.24% to trade at $3.062 a pound.