Investing.com -- Gold fell mildly on Monday to hit a fresh 3-week trough, amid hawkish sentiments from a pair of Federal Reserve policymakers on the likelihood for a gradual increase in short-term interest rates over the next year, providing further downward pressure on the precious metal.
On the Comex division of the New York Mercantile Exchange, gold for June delivery traded between $1,243.50 and $1,256.60 an ounce before settling at $1,249.25, down $3.65 or 0.29% on the session. Gold has tumbled more than 3% over the last three weeks since hitting 15-month highs around $1,300 an ounce at the start of May. Despite the recent slump, the precious metal is up by more than 17% since the start of the year and is on pace for one of its strongest first halves of a year in more than a decade.
Gold likely gained support at $1,231.60, the low from April 25 and was met with resistance at $1,304.40, the high from May 2.
Gold extended last week's losses in overnight trading after Federal Reserve Bank of St. Louis president James Bullard reiterated that the U.S. central bank has a plan in place to raise rates gradually if the economy improves as expected. Speaking at the of the Official Monetary and Financial Institutions Forum in Beijing, Bullard emphasized that he sees more factors in favor of a series of slow rate increases than no hikes at all, as the Federal Open Market Committee (FOMC) prepares for a critical interest rate decision in three weeks.
Prior to the meeting, the U.S. Department of Labor will release its May national jobs report next week, providing the FOMC with key data on the pace of job growth nationwide. While nonfarm payrolls have increased exponentially and the unemployment rate has fallen steadily, the U.S. economy added only 160,000 jobs in May far below consensus estimates.
"Labor markets are relatively tight. This may put upward pressure on inflation going forward," said Bullard a voting member of the FOMC during the current cycle. "This is an important factor supporting the FOMC view on the expected path of the policy rate."
Several hours later, San Francisco Fed president John Williams said in an appearance in New York that he thinks it could be appropriate to raise interest rates two to three times this year, followed by another three to four times in 2017. The FOMC has left its benchmark Federal Funds Rate unchanged this year at a level between 0.25 and 0.50%. In December, the FOMC abandoned a seven-year zero interest rate policy by raising rates for the first time in nearly a decade. Later during a question and answer session, Williams admitted he is not sure whether the FOMC will raise rates in June.
Bullard kicked off a busy week of public appearances for FOMC members, ahead of the release of GDP and Consumer Sentiment data on Friday. Fed chair Janet Yellen will close the week with a speech at the Radcliffe Institute for Advanced Study at Harvard University.
Any rate hikes this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, lost more than 0.10% to an intraday low of 95.21, retreating from 3-week highs. The index has crashed by more than 4% since early-December.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery fell 0.102 or 0.62% to $16.430 an ounce.
Copper for July delivery inched up 0.001 or 0.02% to $2.056 a pound