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Gold slides over 1% on dollar strength as Fed meeting looms

06/14/2021 | 08:43am EDT

* Specs cut gold bullish positions in week ended June 8- CFTC

* Dollar hovers near one-week high; Fed meeting on June 15-16

June 14 (Reuters) - Gold prices fell more than 1% on Monday, weighed down by a stronger dollar and easing concerns about inflation, while investors awaited cues from the U.S. Federal Reserve's policy meeting due later this week.

Spot gold fell 1.4% to $1,849.98 per ounce by 1217 GMT, after hitting its lowest since May 17 at $1,848.49. U.S. gold futures dropped 1.4% to $1,852.50 per ounce.

Along with a stronger dollar, profit-taking is weighing on the metal, said independent analyst Ross Norman, adding the market was seeing some book squaring ahead of the Fed's June 15-16 meeting.

"What really matters is to what extent the Fed is going to be focusing on the immediate problem, which is likely inflation, or the longer-term problem, which is going to be tapering," Norman said.

The dollar was little changed after posting its biggest weekly rise in six weeks.

Last week, data showed a sharp rise in May U.S. consumer prices. But Fed officials have repeatedly said inflation would be transitory.

Gold is traditionally considered a hedge against inflation that may be triggered by widespread stimulus measures.

"The Fed is expected to leave policy unchanged and again play down taper talk," ING analysts said in a note.

"Nonetheless, markets will be looking for hints on whether the Fed is starting to acknowledge that inflation may not be as transitory as thought. A technical adjustment to address the rapid build-up in excess liquidity is certainly possible, but dollar downside risks remain."

Speculators reduced their net long positions in COMEX gold in the week ended June 8 and raised their net long positions in silver.

Elsewhere, silver fell 1.1% to $27.59 per ounce, palladium dropped 1% to $2,749.01, and platinum dipped 0.4% to $1,145.95. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Subhranshu Sahu and Bernadette Baum)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.22% 0.73488 Delayed Quote.-4.03%
BRITISH POUND / US DOLLAR (GBP/USD) -0.01% 1.3883 Delayed Quote.1.11%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.20% 0.7956 Delayed Quote.1.54%
EURO / US DOLLAR (EUR/USD) -0.07% 1.1812 Delayed Quote.-3.35%
GOLD 0.08% 1801.12 Delayed Quote.-5.29%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.03% 0.013419 Delayed Quote.-1.74%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.39% 0.69342 Delayed Quote.-2.49%
PALLADIUM 0.36% 2619.777 Delayed Quote.8.07%
SILVER 0.56% 24.84 Delayed Quote.-4.48%
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