Gold rangebound ahead of US data

Bengaluru — Gold prices rose slightly on Wednesday helped by lower treasury yields, but were stuck in a tight range as investors waited for more US data to gauge the Federal Reserve’s next step on monetary policy.

Spot gold was up 0.3% at $2,334.81/ by 3.12am GMT, trading in a narrow $11 range after prices fell 1% in the previous session.

US gold futures rose 0.3% to $2,354.50.

Benchmark 10-year treasury yields lingered near their lowest level in almost three weeks hit on Tuesday, making bullion more attractive to investors.

“The key event is the ISM services report ... the ideal scenario for gold bulls is to see the ISM services remain just below 50 level, with the prices paid component expanding at a slower pace — as this satisfies the ‘soft landing’ scenario the Fed are aiming for,” said City Index senior analyst Matt Simpson.

The US services data is due at 2pm GMT. Markets are also awaiting the ADP employment report due at 12.15pm GMT on Wednesday and the nonfarm payrolls data on Friday for further clues about the health of the US economy and if it will deter the Fed from cutting rates in September.

Higher interest rates increase the opportunity cost of holding the non-yielding asset.

Net purchases of gold by global central banks rose to 33 metric tonnes in April from a revised net buying of three tonnes in March, the World Gold Council (WGC) said, signalling continuing strong appetite from the sector despite high prices for the metal.

Among other metals, spot silver rose 0.7% to $29.69/oz, platinum was up 0.6% at $992.85 and palladium gained 0.9% to $923.83.

Reuters