Gold Retreats as Dollar, Yields Firm on Strong U.S. Data

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U.S. 10year Treasury yield firms above 1.6

U.S. manufacturing activity picked up last month

Stocks hover near record highs on rebound bets Recasts, adds comment, and updates prices

June 2 Reuters Gold prices on Wednesday retreated from a near fivemonth high scaled in the previous session, as the U.S. dollar and Treasury yields firmed on the back of robust manufacturing data.

Spot gold was down 0.2 at 1,895.58 per ounce, as of 0914 GMT, after hitting its highest since Jan. 8 at 1,916.40 on Tuesday.

U.S. gold futures eased 0.3 to 1,898.80.

The firmer dollar is weighing on gold, and were probably seeing some profittaking, Commerzbank analyst Daniel Briesemann said.

Many market players have opened long positions in gold in the last few weeks, as can be seen by the CFTC statistics. But now it appears that at least some of these positions have been closed again, keeping gold in check, Briesemann added.

Making gold more expensive for investors holding other currencies, the dollar index rose on data that showed a pickup last month in U.S. manufacturing activity.

The U.S. 10year Treasury yields held firm, increasing the opportunity cost of holding bullion, which pays no interest.

However, Commerzbanks Briesemann said bottlenecks in the supply chain and rising commodity prices could limit U.S. manufacturing growth potential, and that the Federal Reserve is paying attention to labour market data.

Investors were also awaiting U.S. payrolls data due on Friday to gauge…

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