Gold prices dipped on Monday as the U.S. dollar held firm, with traders positioning themselves ahead of a much awaited Federal Reserve rate-hike decision due this week.
Spot gold was down 0.4% at $1,981.96 per ounce by 0254 GMT. U.S. gold futures fell 0.4% to $1,991.70.The Federal Open Market Committee will meet on May 2-3, and investors are largely expecting a 25 basis-point interest rate hike.
"If the Fed comes out unexpectedly hawkish, then it won't bode well for gold. However, I don't think prices will fall below the $1,930 level," said Ilya Spivak, head of global macro at Tastylive. Data on Friday highlighted that U.S. consumer spending was unchanged in March, while underlying inflation pressures remained strong, which could see the U.S. central bank raising interest rates again next month.Gold prices rose more than 1% in April as renewed concerns over the U.S. banking turmoil drove investors to the safe-haven asset.
"If we see a meaningful downturn in U.S. economic data that expanded rate cut expectations for the back half of this year, then gold prices could climb above the $2,000 mark," Spivak added.Top bullion consumer China'sunexpectedly shrank in April, official data showed on Sunday, raising pressure on policymakers seeking to boost an economy struggling for a post-COVID lift-off.
Among other precious metals, spot silver fell 0.1% to $25.00 per ounce and platinum lost 0.7% to $1,066.74 per ounce.Many Asian centres were closed on Monday for the Labour Day holiday.
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