Gold Falls Below Record Highs After Dollar Yields Rise

(CTN News) – Despite strong US data, gold prices on Tuesday held near record highs, with the US dollar and Treasury yields remaining firm after strong US data raised doubts about the Federal Reserve’s intention to cut interest rates three times this year.

Despite holding below an all-time high of $2,265.49 reached on Monday, spot gold was unchanged at $2,250.79 per ounce at 0415 GMT.

Gold futures rose 0.6% to $2,271.30. Although has reached a new all-time high, there have been some overbought conditions, which have resulted in a moderate pullback.

Nevertheless, recent pullbacks in gold have been shallow due to the fact that potential buyers have been waiting on the sidelines for better entry points, according to Tim Waterer, chief market analyst at KCM Trade.

After data showed US manufacturing grew for the first time in 1-1/2 years in March, gold’s gains were held in check as the US dollar hovered near 4-1/2-month highs. Meanwhile, 10-year US Treasury yields were at their highest levels in two weeks.

CME Group’s FedWatch Tool indicates that traders pared their bets on a June interest rate cut to 63% after the data came out.

In an interview with Bloomberg Television on Friday, Federal Reserve Chairman Jerome Powell indicated that the latest inflation data do not threaten the central bank’s baseline outlook, however he added that since the economy is on a strong footing, “we are not in a hurry to cut interest rates”.

“Traders will be watching Friday’s US nonfarm payrolls release with interest, as a strong jobs report could provide a catalyst for a pullback in gold,” Waterer advised.

Interest rate reductions tend to boost gold prices because they reduce the opportunity cost of holding bullion.

Among other commodities, spot silver rose 0.7% to $25.26 per ounce, platinum fell 0.1% to $900.65, and palladium increased 1.1% to $1.006.74.

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