LONDON: Gold prices were little changed on Tuesday as the dollar steadied near a six month high, but upside in the precious metal was firmly capped by bullish global economic fundamentals.
Investors are awaiting economic data that might confirm the US economy is on track for a strong quarter, with rising bond yields also supporting the greenback and making dollar priced gold costlier for non-US investors.
Spot gold edged up 0.1 per cent at $1,293.04 per ounce at 1224 GMT, although it is down 0.5pc so far this month, having fallen 1.3pc in May. US gold futures for August delivery were flat at $1,297 per ounce.
“Prices have been dropping since May in anticipation of a Fed rate hike. There’s still some strengthening of the dollar to come. Geopolitics is on the backburner,” said Bernard Dahdah, precious metals analyst at Natixis. Stronger-than-expected US jobs data released on Friday fuelled expectations that the Federal Reserve would raise interest rates at its policy meeting starting on June 12.
Higher interest rates tend to boost the dollar and reduce investor interest in non-yielding bullion. A strong reading on ISM non-manufacturing PMI for May later this session will seal the case for another Fed rate hike, following up on a rate hike in March and might even prompt the central bank to strike a hawkish stance.
Spot gold is still targeting the May 21 low of $1,281.76 per ounce, as its bounce from this level has completed, according to Reuters technical analyst Wang Tao.
In other precious markets, silver rose 0.3pc to $16.42 an ounce. Platinum fell 0.7pc to $894.20 an ounce. It earlier hit a low of $888, the lowest since May 21. Palladium was 0.6pc lower at $988.80 per ounce after hitting a six-week high of $1,010.50 the previous session.
Published in Dawn, June 6th, 2018
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