By Deep Kaushik Vakil
(Reuters) – Gold prices were flat on Tuesday as a stronger dollar countered support from lower Treasury yields, while investors awaited a slew of U.S. economic data due later this week that could sway the Federal Reserve’s interest rate-hike stance.
Spot gold was mostly unchanged at $1,988.59 per ounce by 11:50 a.m. EDT (15:50 GMT), while U.S. gold futures were also nearly flat at $1,999.00.
Rival safe-haven dollar rose 0.5%, making bullion more expensive for buyers holding other currencies, while benchmark 10-year Treasury yields fell. [USD/] [US/] [.N]
The dollar also seemed to be the preferred bet after a weak U.S. consumer confidence report and lacklustre manufacturing data on Tuesday.
Next on the radar is the quarterly gross domestic product data scheduled for Thursday followed by the core personal consumption expenditures (PCE) index, the Fed’s favoured inflation gauge, on Friday.
“The Fed would do its best to try and hold rates higher in order to quell inflation but that likely means that it might be a constraint on the economy growing as quickly,” said Everett Millman, chief market analyst at Gainesville Coins.
“No matter what decision they have to make, it’s probably going to result in some type of stress, and that looming uncertainty is certainly what gold is going to be sensitive to.”
Markets see an 84% chance of a 25-basis-point rate hike at the Fed’s May 2-3 meeting.
While gold is considered a safe haven during economic uncertainties, higher interest rates dull appeal for zero-yield bullion.
Traders also took stock of U.S. Treasury Secretary Janet Yellen’s warning that failure by Congress to raise the government’s debt ceiling would trigger an “economic catastrophe,” that would send interest rates higher for years to come.
Silver shed 2.1% to $24.65 per ounce, platinum fell 0.1% to $1,081.34 and palladium lost 3.3% to $1,485.01.
(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Subhranshu Sahu and Shailesh Kuber)
