Gold futures inched lower on Monday, holding at $1,400 an ounce, as traders weighed the scope for rate cuts by the Federal Reserve following last week's stronger-than-expected round of June jobs data.
Traders look to testimony from Fed Chairman Jerome Powell's to Congress later this week to provide a catalyst for the next big move for the precious metal.
Given global concerns, including an economic pullback, Brexit, and the Middle East, there is "enough to urge buyers for gold to step up when large event-driven selling occurs," said George Gero, managing director of RBC Wealth Management.
While the U.S. jobs numbers caused sellers to drive down the price of gold last week, with some traders concerned that no rate relief is in sight, gold trading has moved "back to basics this week," he said in daily commentary.
Powell is scheduled to provide his annual midyear update to lawmakers in a pair of hearings on Wednesday and Thursday that will be closely watched for further clues to policy makers' thinking.
Gold for August delivery on Comex GCQ19, -0.41% fell by 10 cents, or 0.01%, to settle at $1,400 an ounce, after trading between a high of $1,409.90 and high of $1,395. September silver SIU19, -0.38% rose 4.9 cent, or 0.3%, to $15.05 an ounce.
A Friday decline following the jobs data left the yellow metal negative for the week. The upbeat employment picture saw traders scale back expectations for rate cuts by the Fed, sharply reducing bets on a half-point cut when policy makers meet at the end of the month. A quarter-point reduction, however, remains widely expected.
"There is potential for a deeper downside correction if the Fed expectations were to become less dovish. The key support to the May-July positive trend is seen at $1,375, the major 38.2% Fibonacci retracement," said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
Growing expectations for Fed rate cuts have been credited with lifting gold, which is up over 9% so far this year and hit a six-year high last month. Lower rates are seen as supportive for the metal, which offers no yield, as they cut the opportunity cost of holding the metal.
Read: Worries on economy haven't vanished after job gains, trade truce
In other metals trading, October platinum PLV19, -0.18% climbed $9, or 1.1%, to $820.40 an ounce, while September palladium PAU19, +0.16% fell $6, or 0.4%, to $1,558.20 an ounce.
July copper HGN19, -1.07% settled at $2.659 a pound, down nearly 0.1%.