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Gold Down from Two-Week High Against Stronger Dollar, Fed Optimism

Published 05/04/2021, 12:31 AM
Updated 05/04/2021, 12:35 AM
© Reuters.

By Gina Lee – Gold was down on Tuesday morning in Asia, after hitting an over two-month high during the previous session, as the dollar strengthened and investors digested U.S. Federal Reserve Chairman Jerome Powell’s optimistic comments on the economy.

Gold futures edged down 0.19% to $1788.35 by 12:29 PM ET (4:29 AM GMT).

Powell said on Monday that the U.S. economy is gradually recovering from the COVID-19, but warned that it is "not out of the woods yet." He also noted that the less educated and working parents suffered a disproportionate blow during the COVID-19.

Elsewhere on the central bank front, the Bank of Canada could start hiking interest rates ahead of the Fed, which has given the Canadian dollar a boost, but previous tightening cycles suggest that this boost might not be sustained for long.

Investors also await the Reserve Bank of Australia’s policy decision to be handed down later in the day. The Bank of England and Norges Bank will hand down their respective policy decisions on Thursday.

The U.S. also released a lower-than-expected Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index on Monday, which read 60.7 for April. A shortage of inputs against pent-up demand as COVID-19 vaccination rates rise and further U.S. stimulus measures are proposed, led to the surprise drop in the index.

Other data that will be released later in the week include U.S. trade balance and the April U.S. employment report, including non-farm payrolls.

In Asia, South Korea’s consumer price index grew 2.3%, near a four-year high, year-on-year in April thanks to a low base in 2020 alongside rising oil and agricultural prices.

In other precious metals, silver slid 0.5% and platinum inched down 0.1%, while palladium edged up 0.2%.

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