Gold prices held close to a record high hit in the previous session on Tuesday, as the dollar and Treasury yields held firm after strong U.S. data raised doubts about whether the Federal Reserve will cut interest rates three times this year.
“Gold has hit a new record high, and with that high there have also been signs of overpricing, leading to a modest pullback,” said Tim Waterer, senior market analyst at KCM Trade. “However, recent declines in gold have been mild in nature as potential buyers wait on the sidelines for better opportunities to return.”
Traders will be watching the US non-farm payrolls report on Friday, because if we see another strong jobs report, it could provide a catalyst for a gold rebound, Waterer added.
Gold extended gains despite the dollar rising to a four-and-a-half-month high, while benchmark 10-year Treasury yields were trading near their highest levels in two weeks, after data showed the US manufacturing sector expanded for the first time in a year and a half in March.
Federal Reserve Chairman Jerome Powell said Friday that the latest inflation data had not affected the central bank's core outlook, but said the strength of the economy meant we did not need to rush into easing.
Gold usually rises as interest rates are lowered because this reduces the opportunity cost of holding bullion.
Price movements
By 08:12 GMT, spot gold was up 0.46 percent at $2,261.48 an ounce, still below its all-time high of $2,265.86 hit on Monday.
US gold futures rose 1.12 percent to $2,282.55 an ounce, also moving close to their all-time high of $2,286.4 an ounce.
As for other precious metals, silver rose 2.24 percent to $25.64 per ounce, platinum rose 0.6 percent to $907.45, and palladium rose 1.2 percent to $1,008.44.
