Gold off 2-week high as dollar gains on solid U.S. manufacturing data
Gold prices declined after rising to a 2-week peak in the prior session as the dollar rebounded after robust U.S. manufacturing data boosted hopes around global economic recovery.
Spot gold was trading 0.3 percent lower at $1,964.13 per ounce by 0655 GMT, having hit a high of $1992.56 on Tuesday, its highest since August 19. U.S. gold futures dropped 0.3 percent to $1,973.20.
The dollar index rebounded from an over 2-year low after data showed U.S. manufacturing activity accelerated to a near 2-year high in August. The IHS Markit's Manufacturing Purchasing Managers' Index for the U.S. improved from 50.9 in July to 53.1 in August, suggesting that the economic activity in the manufacturing sector continued to expand at a robust pace.
However, the upside in the dollar appear limited amid expectations that U.S. interest rates would stay low for longer under the new monetary policy approach from the Federal Reserve. Moreover, U.S. political uncertainty ahead of November's presidential election and concerns about U.S. economic recovery also dented the bid tone around the greenback.
On Tuesday, Fed Governor Lael Brainard in a speech stated that the central bank would need to roll out more stimulus to fulfil the Fed’s new promise of stronger job growth and higher inflation. Brainard's comments pushed the 10-year U.S. treasuries yields to 0.670 percent from above 0.7 percent as additional stimulus would likely involve more aggressive bond-buying.
The greenback against a basket of currencies traded 0.2 percent up at 92.51, having touched a low of 91.75 on Tuesday, its lowest since April 2018. The U.S. Treasury yields steadied, with the benchmark 10-year note yield trading at 0.685 percent.