Spot gold lost 0.7% during Monday’s trading session, retreating to $4,146 from an intraday peak of $4,202. The pressure comes from a strengthening dollar and expectations of a hawkish signal from the minutes of the Fed’s June meeting.
Weak Labor Market Did Not Help the Metal
US labor market data released last Thursday came in below forecasts—seemingly, this should have reduced bets on a near-term Fed rate hike and supported gold. The reaction, however, was the opposite.
According to ING analysts, the weak data “did not cause serious damage to the dollar”: short-term US rates held onto their April gains. The DXY dollar index is up 0.25%, making gold more expensive for foreign buyers.
Gold futures for August delivery, meanwhile, are up 0.8% to $4,157. The divergence from the spot market reflects traders’ positioning ahead of key data releases this week.
Fed Minutes: Short Document, Hawkish Signal
On Wednesday, the minutes of the Fed’s June meeting—the first under new Chair Kevin Warsh—will be released. At that meeting, the rate remained unchanged, but the regulator’s forecasts allowed for a hike by the end of 2026 amid energy inflation risks.
Warsh is consistently abandoning the practice of forward guidance. According to ING analysts, the minutes will be “significantly shortened,” similar to last month’s trimmed release. The document is shorter, but the tone is expected to remain hawkish: the Fed has not reached its 2% inflation target for five consecutive years and is not ready to change its rhetoric.
Markets are pricing in a 75.1% probability that the rate will remain at 350–375 bps until the December meeting. The room for easing narrows with each month that inflation stays above target.
Five Years Above Target—And the Metal Loses Luster
The mechanics of pressure on gold are clear. It does not provide coupon income—when rates rise, holding it becomes more expensive relative to government bonds with real yields. This calculation has weighed on the price since the start of the year.
From the January all-time high of $5,598, gold has corrected by about 26%. The correction is unfolding amid continued demand from central banks and geopolitical tensions—factors that supported the metal in the first quarter. Now they compete with the prospect of Fed tightening and a resilient dollar.
What Will Drive the Trend Through Week’s End
The Fed minutes on Wednesday are the key event. If the document is less hawkish than the market expects, gold may return to the $4,200 zone. If a hawkish stance is confirmed, the next significant support is $4,044—the 0.786 Fibonacci level from the January high.
The dollar index in this equation remains a leading indicator. As long as DXY holds its April gains, gold’s short-term upside is limited regardless of Warsh’s rhetoric. Notably, even the release of weak employment data could not break this balance—meaning the market sees the risk of rate hikes as higher than official forecasts suggest.
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