Gold Futures for August Settlement oscillated between $1879.75 and $1854.95 per troy ounce as a stronger dollar and the threat of a definite taper-talk by the Federal Reserve diminished the yellow metal's glitter. Today's correction of more than 1 percent from Friday's level unveiled re-emerging anxieties of tapering that saw the Dollar Index strengthen to five-week highs.
Though investors relied on gold as a significant inflation hedge, an aggressive posture of tapering by the Fed could see a sell- off in the commodity.
Markets will keenly watch out for the Federal Reserve Open Market Committee's Wednesday meeting to review the Federal Funds Rate and projections. Any deviation from the rhetoric of transitory spike in inflation could harm the yellow metal's prospect in the days to come.
Upbeat economic data, consumer sentiment above market expectations and jobless claims at pre-pandemic low are all threatening to set a downward course for the precious metal in the near future.
Gold market watchers will have their focus on Wednesday's Fed views on inflation and tapering timetable to assess whether possibility of continuance of an accommodative stance by Fed is real. Till then we can expect the metal to whipsaw in intermittent phases of bearishness and bullishness.