Gold falls, as muted inflation data bolsters case for delayed rate hike

Investing.com — Gold futures inched down on Monday amid a stronger dollar, even as muted inflation data for the month of June provided support to dovish arguments for a delayed interest rate hike by the Federal Reserve.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a tight range between $1,088.60 and $1,097.10 before settling at $1,090.60, down 4.60 or 0.42% on the session. After rallying slightly toward the end of last week, have closed moderately lower during each of the last two sessions. Over the last month, gold has declined by more than 6% during one of its most severe routs since 2010.

Gold likely gained support at $1,079.20, the low from July 31 and was likely met with resistance at $1,104.90, the high from July 21.

On Monday morning, the U.S. Department of Commerce's Bureau of Economic Analysis said increased by 0.2% in June in line with analysts expectations, while personal income rose by 0.4% — slightly higher than consensus estimates. Analysts forecasted a 0.3% rise in incomes for the month.

More critically the , which strips out food and energy prices, inched up 0.3% for the month, up from a 0.2% increase for May. On a year-over-year basis, however, the gains were muted as the only increased by 1.3%. At its July FOMC meeting last week, the Fed reiterated that inflation remains below its targeted goal of 2% over the medium term, commonly defined as a period of the next one to two years.

The reading will likely bolster dovish viewpoints on the Fed for a delayed interest rate hike beyond this fall. Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.

Elsewhere, Gallup said in its monthly U.S. Consumer Spending Measure that self-reports from American consumers on a monthly basis averaged approximately $91 for July, up one dollar from its level in June. While the figure is slightly lower than its level from July, 2014, it is also higher than any other reading for the month since 2009. Over the last several months, consumer spending has remained relatively flat, according to Gallup's measure.

The , which measures the strength of the greenback versus a basket of six other major currencies, reached an intraday high of 97.69 before paring some of the gains after the release of the data. In U.S. afternoon trading, the index fell to 97.52, up 0.20% on the day.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

In Greece, the Athens Stock Exchange took as much as a 30% nosedive before closing down 23% in its first session to reopen since closing five weeks ago during the height of the Greek Debt Crisis. Last week, Greek government officials met with a troika of creditors from the European Commission, European Central Bank and International Monetary Fund in the initial round of new talks aimed at completing a three-year, EUR 86 bailout. Gold is viewed as a safe haven for investors in periods of severe economic instability.

The possibility of a Greek departure from the euro, which could trigger contagion throughout the zone, has lessened dramatically since Greece agreed on a preliminary cash-for-reforms deal with its European creditors last month in a historic agreement.

Silver for September delivery fell 0.24 or 1.63% to 14.505 an ounce.

for September delivery dipped 0.022 or 0.92% to 2.342 a pound.