Gold prices were hovering at 2-week lows on Monday, as the U.S. dollar regained some strength ahead of this week’s Federal Reserve policy meeting, although ongoing U.S. political woes were expected to limit the greenback’s gains.
Comex gold futures were down 0.22% at $1,309.7 a troy ounce by 03:20 a.m. ET (07:20 GMT), just off a two-week trough of $1,307.4 hit overnight.
The dollar found some support after data on Friday showed that U.S. industrial production jumped in February, boosted by robust increases in output at factories and mines.
A separate report showed that an index of U.S. consumer sentiment rose in March.
The data offset an earlier report showing that U.S. housing starts declined more than expected last month.
Later in the week, the Fed is widely expected to raise rates by a quarter point at the conclusion of its two-day policy meeting. Investors will mostly be focusing on any indications as to the pace of monetary policy tightening for the remainder of the year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 89.85, just off Friday’s two-week peak of 90.38.
Gold is sensitive to moves in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
Investors were still cautious however amid concerns that more top Trump administration officials could be ousted from the White House and worries over the economic impact of U.S. trade tariffs.
Elsewhere on the Comex, silver futures slipped 0.17% to $16.25 a troy ounce.
