MARKET UPDATE
Gold prices weak as rate fears mount.
Gold prices moved in a flat-to-low range in Asian trade on Monday, nursing steep losses from last week as fears of high U.S. interest rates mounted before a Federal Reserve meeting and key inflation data due this week.
The yellow metal had tumbled from near record highs last week after nonfarm payrolls data on Friday read much higher than expected, which caused traders to rethink expectations for a September rate cut.
Spot gold rose 0.1% to $2,295.7 an ounce, while gold futures expiring in August fell 0.6% to $2,312.30 an ounce by 00:44 ET (04:44 GMT).
Gold traders on edge with Fed meeting, CPI data on tap
Markets were focused squarely on an upcoming Fed meeting, with a rate decision due on Wednesday.
The central bank is widely expected to keep rates steady. But any cues on future policy will be closely watched, especially following recent signs of resilience in U.S. inflation and the labor market.
Asia FX muted as dollar rebounds.
Most Asian currencies retreated on Monday as the dollar rebounded after a blowout nonfarm payrolls report saw fears of high for longer interest rates creep back into markets.
The dollar also benefited from a drop in the euro, which hit a one-month low amid political uncertainty after the results of the European Union elections showed a broad swing towards right-wing parties.
French President Emmanuel Macron called for snap legislative elections later in June after his party was beaten by Marine Le Pen’s far-right party in the EU vote.
Regional trading volumes were limited on account of market holidays in China, Hong Kong and Australia.
Dollar strong with Fed meeting, CPI data on tap
The dollar index and dollar index futures advanced in Asian trade on Monday, extending strong gains from Friday after a strong nonfarm payrolls report.
Oil climbs on hopes of summer fuel demand.
Oil prices edged up on Monday, aided by hopes of rising fuel demand this summer despite being weighed down by a firmer dollar, as expectations of interest rate cuts were pushed out further following strong U.S. jobs data.
Brent crude futures gained 28 cents, or 0.4%, to $79.90 a barrel by 0427 GMT and U.S. West Texas Intermediate crude futures was up 0.3%, or 26 cents, at $75.79 a barrel.
On Friday, data showed the U.S. added more jobs than expected last month, leading investors to trim expectations for rate cuts, which helped the dollar to rally. [FRX/]
A stronger greenback makes dollar-denominated commodities such as oil more expensive for holders of other currencies.
The euro also came under pressure, reflecting uncertainty in the eurozone after French President Emmanuel Macron called snap legislative elections for later in June after he was trounced in the European Union vote by Marine Le Pen’s far-right party.
“Regarding Macron and elections, it does create another layer of uncertainty, coming after the upside surprise in U.S. non-farm payrolls, which saw yields scream higher,” Tony Sycamore, a Sydney-based analyst at IG said.
Markets are now focused on the U.S. Federal Reserve and Bank of Japan meetings this week, with the risks of more hawkish outcomes, Sycamore said.
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