Investing.com - Gold futures extended losses from last week in holiday-thinned European trade on Monday, falling to a five-week low amid speculation the Federal Reserve could give serious consideration to a rate hike at its April meeting, boosting the U.S. dollar.
Gold for June delivery on the Comex division of the New York Mercantile Exchange sank $7.20, or 0.59%, to trade at $1,216.30 a troy ounce by 06:50GMT, or 2:50AM ET, after hitting a session low of $1,206.20, the weakest since February 23.
Last week, gold prices declined $32.40, or 2.58%, the third straight weekly loss and the biggest since November, as a stronger dollar and expectations that the Fed will raise interest rates in coming months weighed.
On Monday, Federal Reserve Bank of San Francisco President John Williams reiterated that rate hikes this year are expected if data trends continue to show sold U.S. economic growth.
The hawkish comments follow similar remarks made by a handful of Fed officials last week.
The prospect of more U.S. interest rate rises this year bolstered the dollar against its major rivals. The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to an eight-day high of 96.42 in early trade.
A stronger dollar makes U.S. commodities more expensive for buyers holding other currencies.
In the week ahead, market players will be turning their attention to a highly anticipated speech by Federal Reserve Chair Janet Yellen on Tuesday for further clues on the timing of the next U.S. rate hike.
Besides Yellen, there are other Fed speakers in the coming week, including New York Fed President William Dudley on Thursday and Cleveland Fed President Loretta Mester on Friday.
March nonfarm payrolls data and the March ISM manufacturing report, both due Friday, will also be in focus, as investors attempt to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
Despite recent losses, prices of the yellow metal are up nearly 14% so far this year as investors seek safe havens in the face of mounting instability in other financial markets and as fears over a China-led global economic slowdown make it tougher for the Fed to raise rates.
The U.S. central bank surprised markets earlier this month by cutting its rate hike projections more than expected, down from four to two in 2016, citing the potential impact from weaker global growth and financial market turmoil on the U.S. economy.
Also on the Comex, silver futures for May delivery inched up 2.6 cents, or 0.17%, to trade at $15.22 a troy ounce during morning hours in London, while copper futures shed 1.4 cents, or 0.63%, to $2.223 a pound.
Trading on Monday will be light due to a public holiday in many European markets, including London, Frankfurt, Paris and Milan.