Gold edged higher from an 11-month low as the US dollar dipped, with traders dialling back expectations of aggressive US Federal Reserve interest rate increases and assessing the outlook for inflation.
The dollar retreated after closing in on a 20-year high last week against its rivals, making greenback-priced bullion more expensive among buyers holding other currencies.
The dollar index was steady at 107.830, compared with last week's high of 109.290.
Bullion capped its fifth straight weekly loss, the longest streak of such declines in about four years, with investors favouring the greenback as a haven asset, and tighter monetary policy weighing on the non-interest bearing precious metal.
Spot gold rose 0.3 per cent to $1,711.67 an ounce by 0111 GMT, after falling to a near one-year low last week. US gold futures gained 0.2 per cent to $1,708.00.
Federal Reserve officials are on track to raise rates by 75 basis points for the second straight month when they meet later in July, after policymakers pushed back against a bigger increase.
The outlook remains troubling for many investors. The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update as nations run out of options to tackle worsening risks.
Investors reversed bets on a full percentage-point move after wary comments from officials, including Atlanta Fed president Raphael Bostic and St Louis’s James Bullard, along with a drop in US consumer long-term inflation expectations, which eased some fears that price pressures were becoming entrenched.
Data released on Friday also showed that US retail sales were stronger than expected in June, underscoring a resilient economy despite tightening monetary policy.
Investors were also considering China’s pledges to shore up growth. Still, the outlook for the global economy remains cloudy, with the International Monetary Fund saying it will cut its growth outlook “substantially” in its next update, as finance chiefs grapple with a shrinking list of options to address the worsening risks.
“Gold prices are seeing some slight reprieve into today’s session, with a lift from the US dollar’s weakness, but prices continue to trade with a downward bias,” said Yeap Jun Rong, market strategist at IG Asia Pte.
“We may have to see some signs of ‘peak hawkishness’ kicking in over the coming months, in order for gold to regain some market confidence.”
— Additional reporting by Reuters