Gold Falls Anew As Strong US Data Curbs Bargain-Hunting

Gold prices fell on Tuesday, revisiting earlier session lows after bargain-hunting was squashed by constructive U.S. manufacturing data that supported the case for a recovery.

On Monday, comments from Federal Reserve Chair Janet Yellen defending easy-money policies hurt the dollar, which helped bullion pull back from a drop to seven-week lows. That sparked interest from bargain-hunting buyers.

However, two separate reports showed the U.S. manufacturing sector continued to expand at a steady pace, which dampened buying interest once again. Spot gold fell 0.2 percent at $1,281 an ounce, while U.S. gold futures for June delivery were down 0.3 percent at $1,280 an ounce.

The metal fell to a low of $1,278.34 an ounce in Asian trade as stocks rallied on the back of Yellen’s comments, which reassured investors that the bank would maintain monetary support for the U.S. economy.

Such comments would usually lift gold, which has benefited in recent years from the low interest rates and concerns over inflation sparked by the Fed’s ultra-loose monetary policy.

The dollar retreated, stock markets rose in Europe and Asian shares hit a four-month high on Tuesday after Yellen’s comments and China’s official PMI survey, which showed the manufacturing sector managed to continue expanding in March. Gold, which is priced in dollars, tends to take support from weakness in the U.S. currency.

Traders are now looking ahead to significant events for currencies and gold later this week, including the outcome of the latest European Central Bank governing council meeting on Thursday, and Friday’s U.S. non-farm payrolls data.

Source: Reuters  & CNBC