Gold prices on Tuesday hovered below record highs reached in the previous session, while the US dollar and government bond yields held steady after strong US data raised doubts about whether the Federal Reserve would make three interest rate cuts this year.
Spot gold was unchanged at $2,250.79 an ounce as of 0415 GMT, remaining below an all-time high of $2,265.49 reached on Monday. U.S. gold futures rose 0.6% to $2,271.30.
“Gold recorded a new record price, but with that high watermark came some overbought conditions, which resulted in a mild pullback. However, recent pullbacks in gold have been superficial in nature as potential buyers stood on the sidelines waiting for better entry points,” he said. Tim Waterer, chief market analyst at KCM Trade.
Bullion gains were contained as the U.S. dollar held near a 4-1/2-month high, while the benchmark U.S. 10-year Treasury yield neared a two-week high after data showed U.S. manufacturing grew in March for the first time in 1-1/2 years.
Traders cut bets on a June rate cut to 63% after the data, according to CME Group’s FedWatch Tool.
Federal Reserve Chairman Jerome Powell indicated on Friday that the latest US inflation data did not undermine the central bank’s basic expectations, but said that with the economy strong, “that means we don’t have to rush with an interest rate cut.”
“Traders will be keeping their eyes on Friday’s US nonfarm payrolls release because if we happen to see another strong jobs report, it could be a catalyst for a pullback in gold,” Waterer said.
Gold tends to gain when interest rates are lowered because this lowers the opportunity cost of holding the precious metal.
Elsewhere, spot silver rose 0.7% to $25.26 an ounce, platinum fell 0.1% to $900.65 and palladium climbed 1.1% to $1,006.84.
Tags: Gold hovers record highs dollar bond yields remain stable positive data
