Gold prices declined on Monday as the dollar rose in response to stronger-than-anticipated U.S. manufacturing data. At the same time, markets awaited the Federal Reserve’s decision on whether to raise interest rates this week.
At 1:55 p.m. ET (1755 GMT), spot gold was down 0.4% to $1,982.20 per ounce, reversing nearly 1% in earlier gains.
Gold futures in the U.S. settled down 0.3% at $1,992.20.
As new orders increased and employment rebounded, the U.S. manufacturing industry rebounded from a three-year low in April. Construction expenditure increased more than anticipated in March due to investments in nonresidential structures.
Jim Wyckoff, senior analyst at Kitco Metals, stated that the stronger-than-anticipated data weakened the metals market and boosted the dollar slightly.
The dollar index increased by 0.5%, making bullion priced in dollars less appealing to foreign purchasers.
Gold prices rebounded to $2,005 in early U.S. trading hours as traders realized that JPMorgan Chase & Co (JPM.N) would acquire the majority of First Republic Bank’s (FRC.N) assets after regulators confiscated the troubled lender over the weekend.
Investors will also pay close attention to Fed Chair Jerome Powell’s press conference to determine if the central bank’s commentary delays market expectations of rate cuts before the end of the year in light of the recent banking turmoil and impending recessionary risks.
Gold is known as a hedge against inflation, but rising interest rates tend to reduce demand for non-yielding bullion.
Spot silver fell 0.2% to approximately $25 per ounce, while platinum and palladium fell 2.2% and 3.2%, respectively, to $1,050.83 and $1,455.87.