Gold Price up 1 percent on soft dollar after weak U.S. data
New York (Apr 28) Gold rose 1 percent on Tuesday after disappointing U.S. data hit the dollar and dampened expectations that the Federal Reserve will hint at this week's policy meeting at an interest rate hike in coming months.
Spot gold XAU= climbed 1.1 percent to a three-week high of $1,215 after the data showed U.S. consumer confidence dropped in April to its lowest since December.
It was up 0.9 percent at $1,212.13 (76,404 rupees) an ounce at 2:42 p.m. EDT (1842 GMT) after a 2 percent rise on Monday, while U.S. gold futures for June delivery GCcv1 settled up $10.70 an ounce at $1,213.90.
The dollar fell 0.8 percent to an eight-week low against a basket of leading currencies following the unexpectedly weak U.S. consumer confidence report. Traders said this supported gold prices.
Some recent data suggests "the Fed is going to be pushed back longer into a tightening posture," said Eli Tesfaye, senior market strategist for RJO Futures in Chicago. "Market participants have no choice but to go ahead and bid gold."
Tesfaye said that increasingly positive technical factors also attracted buyers, with $1,124 as the next target level.
Recent sluggish economic data from the United States led the market to expect the Fed will probably not act until later in the year. A rate hike could dent demand for bullion as investors' appetite for non-yielding assets diminish.
The statement following the Fed's two-day meeting is scheduled for release on Wednesday.
"Market participants are focussing on the Fed meeting on hopes of some hints on when the Fed will raise interest rates," Commerzbank analyst Daniel Briesemann said. " ... However, I don't think we will get any surprising news tomorrow."
In the physical markets, demand for gold eased as the price neared the key $1,200 level.
China's gold imports from Hong Kong dipped in March to their lowest level in seven months, data showed on Tuesday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.44 percent to 739.07 tonnes on Monday, the first decline in two weeks.
Among other precious metals, silver XAG= rose 1.5 percent to $16.60 an ounce after a 4.3 percent gain in the previous session, boosted by gold's advance.
Platinum XPT= turned up 0.4 percent to $1,153 an ounce after a 2.3 percent jump on Monday, while palladium XPD= rose 0.1 percent to $778.50 an ounce.