Gold futures ended lower Monday as a popular dollar gauge climbed and benchmark Treasury yields cleared their highest level since April 2014.
February gold GCG8, +0.16% lost $11.80, or 0.9%, to settle at $1,340.30 an ounce. The SPDR Gold Shares exchange-traded fund GLD, -0.43% fell 0.5% and the VanEck Vectors Gold Miners GDX, -0.97% eased 2.3%.
Selling has set in ahead of the U.S. Federal Open Market Committee monetary policy meeting, which concludes Wednesday, and January nonfarm payrolls due on Friday, putting pressure on gold prices, said Chintan Karnani, chief market analyst at Insignia Consultants.
"From a technical perspective, [the] inability of gold to break past $1,370 also resulted in profit taking," he said, adding that key support for the metal stands at $1,333.50. "Gold needs to trade over $1,333.50 after the FOMC meeting and nonfarm payrolls on Friday to prevent a crash."
Gold futures had climbed about 1.4% last week, to log their sixth such gain in seven weeks. Gold's Friday loss came in contrast to Thursday's regular session, when prices finished at the highest settlement for a most-active futures contract since Aug. 4, 2016. Gold was driven higher last week by the softer greenback, which had been tumbling in the wake of comments from Treasury Secretary Steven Mnuchin who said a "weak dollar was good for trade" before attempting to clarify those remarks.
The ICE U.S. Dollar Index DXY, -0.07%was up 0.4% on Monday to 89.40. Gold, which is priced in dollars, often trades the opposite direction of the dollar, as moves in the U.S. unit can influence the attractiveness of the precious metal to holders of other currencies.
"The greenback has fallen for five consecutive weeks, so the rise at the start of this week may very well be an oversold bounce rather than a trend reversal," said Fawad Razaqzada, technical analyst at Forex.com. "That could change however in midweek in the event the FOMC turns out to be more hawkish than expected, or at the end of the week should U.S. jobs data come in significantly stronger than anticipated."
For now, "we remain skeptical on the dollar even if it looks severely oversold," he said.
U.S. bonds slumped and yields rose on Monday, continuing the trend from Friday when investors sold government paper after a solid reading on U.S economic growth and ahead of coming auctions of new paper. The rate on 10-year Treasury notesTMUBMUSD10Y, -0.10% rose to as high as 2.717%-the highest since April 2014, according to FactSet data. Rising yields in the U.S. tend to make the dollar more attractive and can spoil the appeal of nonyielding bullion.
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In other metals action, March silver SIH8, +0.30% fell 31.4 cents, or 1.8%, to $17.127 an ounce. It tacked on roughly 2.4% last week.
March copper HGH8, -0.13% ended nearly 0.2% lower at $3.194 a pound. April platinum PLJ8, +0.05% slid 0.6% to $1,012.70 an ounce, while the March palladium contract PAH8, +0.53% fell nearly 0.2% to $1,083.40 an ounce.