Gold prices fell on Wednesday as the dollar rallied, as market participants weighed the timing of possible U.S. interest rate cuts and looked for new clues for more clarity on policy monetary.
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Gold fell on Wednesday as investors awaited U.S. data for clues on possible rate cuts by the Federal Reserve, although a slight rise in the dollar limited any upside.
Spot gold fell 0.2% to $2,308.29 an ounce. U.S. gold futures fell 0.3% to $2,316.30.
The dollar edged up 0.1% on renewed bets on a rate cut this year. A stronger dollar makes gold unattractive to holders of foreign currencies.
“The market will likely wait for a catalyst for further upside, while the decline appears to be capped by limited participation from fund managers,” said Daniel Ghali, commodities strategist at TD Securities.
Investors are now eagerly awaiting consumer confidence analysis released by the University of Michigan on Friday and comments from a slew of Federal Reserve officials this week. U.S. Consumer Price Index data is due on May 15.
After recent weak U.S. jobs data, money markets are pricing in two Fed rate cuts this year and about 40 basis points of monetary easing.
U.S. job growth slowed more than expected in April and annual wage growth fell below 4.0% for the first time in nearly three years.
Lower interest rates lower the opportunity cost of holding non-yielding bullion.
At the same time, the European Central Bank has all but promised a rate cut on June 6 and fears that a delay in easing the US Fed's monetary policy could also force it to take its time.