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Singapore - Gold advanced for the first time in 10 days to snap its longest sell off in more than a year, ahead of data from the US which may determine the timing of monetary policy tightening.
Bullion for immediate delivery rose as much as 0.8% to $1 214.63 an ounce, before trading at $1 213.50 by 07:48, according to Bloomberg generic pricing. Prices dropped to $1 199.80 on Monday, the lowest intraday level since Feb. 17, and are down 6.2% this month, set for the biggest monthly decline since November.
Gold has slumped in May, trimming this year’s rally, as Federal Reserve chair Janet Yellen indicated that an interest rate increase may be warranted in the coming months. Bets on a rate hike have risen to 30% for June and the odds are more than even for an increase in July, according to Fed funds futures.
Investors are looking to US figures on personal spending and income due for release on Tuesday, as well as key jobs data on June 3. Yellen is scheduled to speak in Philadelphia on June 6. The Bloomberg Dollar Spot Index slipped 0.1% on Tuesday to pare its biggest monthly gain since September 2014.
“We’ve got a lot of data this week including non-farm payrolls, we’ve got Yellen speaking next week, so it is by no means certain that we will see the Fed pull the trigger in June,” Robert Rennie, the global head of currency and commodity strategy at Westpac Banking in Sydney, said in a Bloomberg Television interview on Tuesday.
“In fact, we recently shifted our forecast from June to September.”
See-saw
Rennie said he sees the market “see-sawing either side of $1 200 until we get that important data.”
Tuesday’s rally may be due to traders thinking recent declines are overdone, said Ric Spooner, chief analyst at CMC Markets in Sydney. The nine-day drop sent gold’s 14-day relative strength index, a gauge of momentum, toward 30, indicating the metal is oversold.
“The overall sentiment is clearly negative at the moment,” Spooner said by phone. “Certainly, the Yellen statement fueled that selling activity. The logic and rationale is that we are now going to see a Fed rate hike this year in the absences of any sudden or significant change in circumstances. We could even see two - that’s potentially bullish for the US dollar and bearish for gold.”
Holdings in gold-backed exchange-traded funds fell 2 metric tons to 1 842.9 tons as of Friday, data compiled by Bloomberg show.
In China, bullion of 99.99% purity added 0.8% to $1 215.78 an ounce on the Shanghai Gold Exchange. Silver is down 9.7% in May, poised for the biggest monthly decline since September 2014. Palladium slumped 12% in May while platinum lost 9%, with both metals heading for the biggest monthly drop since November.
