Gold Prices Range-Bound as Rate Hike Fears and Oil Volatility Weigh

The gold price has been rising but is still not out of the woods, according to Praveen Singh, Head Currencies and Commodities at Mirae Asset ShareKhan. Spot gold traded with an upward traction on Monday after a sharp decline in oil prices alleviated rate hike concerns to some extent.

However, the metal trimmed its gains from its intra-day high of $4116 as oil prices rebounded slightly from day's low on Saudi Arabia reporting drone attacks by Iran militia from Iraq. At the time of writing this article, spot gold was trading with a gain of 0.20% at $4065.

The US Dollar Index gained 0.70% to close at 101.46 in the week ending July 24, while two-year US yields were steady at 4.32%, and ten-year yields were down 2 bps to 4.65%. Overnight implied rates reflect the Federal Reserve hiking rates 1.09 times by September.

Money managers increased their bullish gold bets by 4,439 net-long positions to 123,586 in the week ending July 21, according to weekly CFTC data. The yellow metal is expected to keep its familiar range of $3950-$4000, which has been in place for the last one month.

Oil prices tumbled on Monday following a pause in strikes after the U.S. carried out 13 consecutive nights of attacks on Iran. Gold posting a weekly gain last week despite higher oil prices, a firmer Dollar Index and higher yields is a positive development for the yellow metal, but it is still not out of the woods as oil prices can be highly unpredictable in the short term.