Shafaq News/ Gold prices hit a more than one-week low on Monday, dragged down by a stronger dollar, while cautious investors awaited the outcome of the U.S. Federal Reserve policy meeting this week with recent spikes in consumer prices seen as a temporary blip.

Spot gold was down 0.6% at $1,864.61 per ounce, as of 0536 GMT, its lowest since June 4.

U.S. gold futures fell 0.7% to $1,866 per ounce.

“The market is starting to anticipate maybe a modest pivot towards discussing taper and it’s sending investors into more of an either profit-taking or reducing gold and also currency positions,” said Stephen Innes, managing partner at SPI Asset Management.

“...the dollar has also gotten a little bit stronger. I think primarily, the inflation pressures are at a state that they may not last, so there’s a little bit of uncertainty how CPI is going to continue playing out.”

The dollar strengthened 0.1% to hover near a one-week high against its rivals, making gold more expensive for holders of other currencies.

Last week, data showed a sharp rise in May U.S. consumer prices. But Fed officials have repeatedly said that inflation would be transitory.

Focus now shifts to the Fed’s June 15-16 meeting for further clarity on policymakers’ view on rising inflation and monetary policy going forward.

Morgan Stanley said in a research note on Friday it expected the Fed to lay the groundwork for increased flexibility on its quantitative easing program in the meeting.

Spot gold may break a support at $1,860 per ounce, and fall towards $1,842, according to Reuters technical analyst Wang Tao.

Speculators reduced their net long positions in COMEX gold in the week ended June 8 and raised their net long positions in silver.

Silver was flat at $27.89 per ounce, palladium eased 0.1% to $2,773.52, while platinum dipped 0.5% to $1,143.89.

Source: Reuters