(MarketWatch)- Gold futures settled lower for a fourth session in a row on Monday as traders weighed the final comments from Federal Reserve officials before the central bank’s monetary policy meeting next week.
Federal Reserve Governor Lael Brainard on Monday, minutes before the settlement for gold futures, struck a dovish tone, saying that the central bank needed to be prudent in considering future rate rises.
Traders will now have scrutinize the lineup U.S. economic data due this week, which include industrial production and the Consumer Price Index, for further clues on the timing of an interest-rate increase.
December gold GCZ6, +0.57% fell $8.90, or 0.7%, to settle at $1,325.60 an ounce. That was the lowest finish since Sept. 1, according to FactSet data. Despite a late-week slide, gold last week managed a 0.6% gain, its second-straight weekly gain.
On Monday, December silver SIZ6, +1.34% posted the more aggressive move as it shed 36.8 cents, or 1.9%, to $19 an ounce—also ending at its lowest level in more than a week.
The ICE U.S. Dollar Index DXY, +0.00% fell 0.3% in volatile trading Monday.
The market has been eyeing the divergence between U.S. monetary policy direction, which is headed higher, and the policy tilt elsewhere, including in Europe and Japan. The divergence remains a key driver in metals and foreign-exchange trading.
“Real interest rates will stay negative for longer. This negative real rate is keeping a bid on gold,” said Nico Pantelis, head of research at Secular Investor. “So, while we expect more volatility for gold in the short run—maybe a dip below $1,300—we don’t see a prolonged downturn. We expect more upward price pressure in Q4 for gold.”
On Monday, Minneapolis Fed President Neel Kashkari told CNBC that there was no pressing need for action from the central bank. During a speech, Atlanta Fed President Dennis Lockhart, meanwhile, refused to discuss his opinion on what the central bank will do at its meetings for the rest of the year because “financial markets seem to be very sensitive to remarks of Fed speakers at the moment.”
The Fed will hold its next policy meeting Sept. 20-21.
A loose monetary-policy stance is positive news for gold bulls as the metal, which doesn’t pay interest, is typically more appealing in a low-rate environment. Conversely, indications for rising rates tend to pressure gold prices. U.S. currency weakness is also a boon for dollar-pegged assets, making them relatively cheaper to buyers using other currencies.
On a technical level, gold prices did mark a second consecutive week of gains, which is bullish, said Mark O’Byrne, a director at GoldCore. “Markets being sentiment- and momentum-driven, this could mean the recent correction is over as technical-driven traders are likely to take signal from this on go long gold.”
Among exchange-traded funds, the SPDR Gold Trust GLD, -0.13% was flat and the iShares Silver Trust SLV, +0.33% was up 0.2%, while the VanEck Vectors Gold MinersGDX, +2.39% added 2.5%.
Back on Comex, December copper HGZ6, +0.00% rose less than a cent to $2.10 a pound, but October platinum PLV6, +1.81% fell $24.60, or 2.3%, to $1,042.90 an ounce and December palladium PAZ6, +1.70% ended at $656.70 an ounce, down $22.75, or 3.4%.