Singapore - Gold held below $1,200 an ounce after the dollar climbed to the highest level in more than six weeks amid speculation that the Federal Reserve will raise interest rates this year. Platinum traded near the lowest price since March.
Bullion for immediate delivery was at $1,189.38 an ounce at 3.16pm in Singapore from $1,189.20 on Monday, when it ended 0.1 percent lower after rising to $1,204.42, according to Bloomberg generic pricing. Prices in Shanghai advanced.
Gold dropped for the past two weeks, trimming this year’s advance to 0.4 percent, as the Fed said it’s looking to raise borrowing costs this year. Manufacturing data on Monday added to evidence the US economy can sustain a withdrawal in stimulus. Rising rates reduce gold’s allure because the metal generally offers returns only through price gains, while a stronger dollar typically cuts demand for a store of value.
“Movements in the US dollar in line with recent economic data will continue to dominate gold,” Vyanne Lai, a Melbourne- based economist at National Australia Bank Ltd, said by email. “If US data continues to support the narrative of a recovering economy, the dollar is likely to rally within the short term, thus weighing down on gold.”
The Institute for Supply Management’s factory index rose to a three-month high of 52.8 in May from 51.5 a month earlier, figures from the Tempe, Arizona-based group showed. Among data due this week are May payrolls on Friday.
The Bloomberg Dollar Spot Index, which rose as much as 0.7 percent on Monday to the highest since April 15, retreated 0.3 percent on Tuesday. The gauge versus 10 major currencies added 1 percent last week and 2.6 percent the week before.
Investors sold bullion in exchange-traded products for a fourth day, cutting holdings 0.2 percent to 1,599.53 metric tons as of Monday, data compiled by Bloomberg showed. Assets are the smallest since mid-January.
Gold for August delivery was little changed at $1,188.40 on the Comex. Bullion of 99.99 percent purity rose 0.1 percent to 237.10 yuan a gram ($1,189.94 an ounce) on the Shanghai Gold Exchange.
Silver for immediate delivery fell 0.2 percent to $16.7358 an ounce. Spot platinum was at $1,105.78 an ounce after dropping to $1,101.03, the lowest level since March 18. The metal is trading near its cheapest relative to gold since 2013. Palladium was at $773.89 an ounce from $773.70.
* With assistance from Phoebe Sedgman in Melbourne
Bloomberg