Gold price down after crossing $2,000 as robust US data counters banking woes
Gold gave up all of its gains in volatile trading on Monday following the release of better-than-expected US manufacturing data in the run-up to the Federal Reserve’s rate hike decision.
Spot gold was down 0.3% at $1,982.81 per ounce by noon EDT, after rising 0.7% to $2,005.73 earlier in the session. US gold futures also lost 0.4% to $1,990.90 per ounce.
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US manufacturing pulled off a three-year low in April as new orders improved slightly and employment rebounded, while construction spending increased more than expected in March.
That stronger-than-expected data knocked down the metals market and boosted the dollar a little bit, said Jim Wyckoff, senior analyst at Kitco Metals, in a Reuters note.
The dollar index gained 0.3%, making greenback-priced bullion less attractive for overseas buyers.
Heading into the session earlier, gold had rebounded above $2,000 as traders took stock of news that JPMorgan Chase would buy most of First Republic Bank’s assets after regulators seized the troubled lender over the weekend.
“The move was definitely premature… We used some of that opportunity to try and capitalize on taking some positions off on that move upwards,” said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.
The Federal Open Market Committee (FOMC) will meet on May 2-3, and markets largely expect a 25-basis-point interest rate hike.
Investors will also focus on Fed Chair Jerome Powell’s press conference to assess if the commentary pushes back market expectations of rate cuts before the year-end amid the recent banking turmoil and threats of an imminent recession.
(With files from Reuters)