Gold settles lower even as dollar tumbles

Gold futures tilted lower in American trade as the dollar index fell off January 23 highs for the fourth consecutive session, following earlier data from the US, the world's largest economy. 

As of 03:05 GMT, gold futures due on April 15 fell 0.05% to $1,325.70 an ounce from the opening of $1,326.40, while the dollar index slid 0.51% to 89.75 from the opening of 90.21. 

Earlier today, Federal Reserve Bank of Cleveland President Loretta Mester spoke about the economic outlook and monetary policy at the Dayton Area Chamber of Commerce Government Affairs Breakfast, while the NFIB Small Business Index rose to 106.9 from 104.9 in December, beating expectations of 106.2. 

The White House announced a new budget plan, which includes a 10-year $200 billion plan to improve US infrastructure and $710 billion for defense, $80 billion for tech, and $18 billion for the border wall. 

The White House also released its forecasts for GDP growth, putting it at 3% in 2018,compared to 2.4% before, and 3.2% for 2019, compared to 2.7% before, and finally 3.1% in 2020. 

Consumer prices are expected to rise 2.1% in 2018 and 2% in 2019 and 2.2% in 2020, while unemployment is projected to fall to 3.9% in 2018 and 3.7% in 2019 and 3.8% in 2020. 

Finally, the White House expects 10-year treasury bond yields to average 2.6% in 2018, and for the budget deficit to hit $873 billion this year, before reaching $984 billion in 2019.

Congress reached a last-minute temporary budget deal on Friday after a brief hours-long government shutdown, the second one this year, before both the Senate and House of Representatives passed the deal and President Donald Trump signed it into law. 

Markets await US inflation data later this week, specifically consumer and producer prices in addition to retail sales, industrial, housing, and consumer confidence data. 

As chances of a Fed rate hike next month increase, gold prices were pushed to month lows last week, as the dollar index also rose to two-week highs on surging US treasury bond yields, however the precious metal was propped up by heavy losses sustained by the stock market, which increased demand on gold as a safe haven. 

Gold holdings at the SPDR Gold Trust settled at 820.71 tonnes, the lowest since August 29, after rising 3% in 2017, or 23.63 tonnes.