Gold edged higher on Monday after plunging in the previous session as the dollar weakened on disappointing U.S. data, including Friday`s report, which showed a decline in the nation`s consumer spending.
As of (09:16GMT+3), gold for immediate delivery edged higher to trade at $ 1,395.41 an ounce after opening at $1,388.62, having earlier hit a high of $1,397.80 and a low of $1,388.59
Gold fell sharply in May amid concerns the Fed could scale back its $85 billion monthly bond purchases as the U.S. economy showed signs of improvement.
However, recently disappointing U.S. data including a decline in U.S. consumer spending weakened argument for a near-term tapering of the central bank`s bond-buying stimulus.
Consumer spending dropped 0.2 percent last month. This comes after a 0.1 percent advance a month before, pushing the dollar down further after yesterday's worrying reports showing that U.S. first-quarter growth was revised down and initial jobless claims rose unexpectedly last week.
Other commodities
- Silver rose 0.25% to $ 22.42
- Platinum edged up 0.21% to $ 1,467.15
- Palladium inched 0.21% up to $ 752.25
The May nonfarm payrolls report, to be released Friday, will receive even more scrutiny than usual due differing interpretations of the Federal Reserve`s communications over the future of the latest asset purchase program.
Analysts expect U.S. employers added about the same jobs in May as in April at 165,000. Other jobs data to be released over the week include the May ADP employment report Wednesday and initial jobless claims Thursday.
The softer dollar also supported gold prices. The USDIX fell on Monday to trade around 83.19 after opening at 83.35, having so far hit a high of 83.35 and a low of 83.19.
Holdings in the SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, remained unchanged at 1,013.15 tons on Friday, after rising for the first time in three weeks on Wednesday. But these are still near four-year lows, having lost nearly 337 tons in 2013 so far.
Furthermore, data released over the weekend pointed to an accelerating economic momentum in the world`s second-biggest gold consumer. China`s official PMI rose to 50.8 in May from 50.6 in April. The data beating market expectations and raising optimism that the world`s second-largest economy could be stabilizing.