Investing.com - Gold prices were under pressure in North American trade on Monday, extending losses from last week as investors looked ahead to key central bank meetings later this week. The Federal Reserve will meet on July 26 to 27, followed by the Bank of Japan’s policy meeting on July 28 to 29.
The Fed is not expected to take action on interest rates at the conclusion of its two-day policy meeting on Wednesday, but market players will scrutinize its policy statement for fresh hints on the timing of interest rate hikes over the next several months.
The BOJ, on the other hand, is widely expected to ease policy further at a policy review ending on Friday, which could include a rate cut deeper into negative territory and additional asset purchases.
Gold for August delivery on the Comex division of the New York Mercantile Exchange fell to a session low of $1,313.10 a troy ounce, just above a three-week low of $1,310.70. It last traded at $1,324.75 by 12:37GMT, or 8:37AM ET, down $6.75, or 0.51%.
On Friday, prices lost $7.60, or 0.57%, as renewed expectations for a Federal Reserve rate hike later this year boosted the U.S. dollar and as investors looked to buy into rising equity markets rather than purchasing safe-haven assets.
The yellow metal declined $4.40, or 0.26%, last week, the second weekly loss in a row.
A recent string of better than expected U.S. data reignited speculation that the Fed will raise interest rates before the end of the year. Interest rate futures are currently pricing in a 45% chance of a rate hike by December, compared with less than 20% a week ago and up from 9% at the start of this month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 97.59 on Friday, a level not seen since March 10. It was last at 97.40 early on Monday, boosted by the diverging monetary policy outlook between the Fed and other global central banks.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The yellow metal remained supported amid speculation central banks in Europe and Asia will step up monetary stimulus in the next few months to counteract the negative economic shock from the Brexit vote.
Gold is up almost 25% for the year to date, boosted by concerns over global growth and expectations of monetary stimulus. Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Prices surged to a more than two-year high of $1,377.50 earlier in July, as concerns surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.