GOLD prices were flat in early Asian trade on Tuesday (May 6), after US services sector data bolstered hopes that the Federal Reserve might pause its monetary policy tightening cycle this month.
Spot gold held its ground at US$1,961.09 per ounce by 0016 GMT. US gold futures were up 0.2 per cent to US$1,977.30.
The dollar index was flat after falling on Monday, while the yield on 10-year Treasuries eased to 3.683 per cent. A softer dollar makes greenback-priced bullion less affordable for overseas buyers.
A survey from the Institute for Supply Management showed the US services sector barely grew in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low, which could aid the Fed’s fight against inflation.
Traders have priced in an 81.7 per cent chance that the Fed will hold interest rates at its Jun 13-14 policy meeting, according to CME Group’s FedWatch tool.
Non-interest-bearing bullion tends to become less attractive in a high-interest rate environment.
Investors are bracing for a wave of US government bond issuance as the Treasury plans to refill its depleted coffers quickly after the recent suspension of the debt limit.
Indicative of sentiment, SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.15 per cent to 939.56 tonnes on Monday from 938.11 tonnes on Friday.
Elsewhere, the Reserve Bank of Australia delivers its latest interest rate decision on Tuesday, undoubtedly the centrepiece event for Asian and Pacific markets but potentially of interest to US Fed watchers too.
Spot silver eased 0.1 per cent to US$23.5595 per ounce, platinum fell 0.2 per cent to US$1,028.03. Palladium was little changed at US$1,413.10 after dipping in the previous session. REUTERS
