Gold declines under pressure from the dollar

Gold prices declined in European trade for the first session in three under pressure from the stronger dollar against major rivals, but the precious metal remains bound in a tight range of trading.

Now traders await more data on the future of the Fed's policy tightening cycle and the potential for more rate hikes. 

Gold Prices Today

Gold prices fell 0.4% to $1,955 an ounce, with a session-high at $1,966, after rising 0.1% on Tuesday, the second profit in a row amid strong haven demand. 

The Dollar

The dollar index rose 0.1% on Wednesday for another session, almost hitting 11-week highs at 104.69 against a basket of major rivals.

Markets are betting the Fed will maintain high interest rates for a longer duration of time. 

The Fed

Recent US data, which showed slower growth in the services sector and higher unemployment, gives the Fed room to cease policy tightening at the June meeting, while opening the door for a resumption in rate hikes at the July meeting. 

US Rates

Markets are pricing in a 20% chance of a 0.25% rate hike by the Federal Reserve in June. 

However, the likelihood for a 0.25% Fed rate hike in July surges to 65%, compared to 35% odds of no change. 

The SPDR 

Gold holdings at the SPDR Gold Trust fell 1.45 tones yesterday to a total of 938.11 tones.