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Gold edges higher on softer dollar, investors eye US data

Gold prices ticked higher on Tuesday helped by a softer dollar and a retreat in Treasury yields, while cautious investors awaited further U.S. economic data due this week to gauge the Federal Reserve’s next policy move.

Spot gold rose 0.3% to US$1,995.09 per ounce by 0715 GMT, while U.S. gold futures edged up 0.2% to US$2,004.10.

The dollar index softened, making bullion cheaper for holders of other currencies.

Gold is getting a boost from a weaker dollar, and focus will remain on the next set of U.S. economic data and the Fed meeting to understand its stand on rate hikes for the rest of the year, said Ajay Kedia, director at Kedia Commodities in Mumbai.

Until then, prices may consolidate in the US$1,970 to US$2,020 range, Kedia added.

Dallas Fed’s Monday report showed manufacturing activity in Texas contracted in April, highlighting the economic toll of the Fed’s rate tightening cycle.

Markets are pricing in an 87.2% chance of a 25-basis-point hike by the Fed at its 2-3 May meeting. Higher interest rates tend to weigh on the bullion’s appeal.

Investors now await the U.S. consumer confidence report scheduled later in the day, ahead of the core personal consumption expenditures index, and GDP quarterly growth rate, due this week.

“These reports are more likely to see the USD weaken which will further strengthen gold prices in the short term,” said Michael Langford, director at corporate advisory firm AirGuide.

Meanwhile, rising concerns that the U.S. Treasury Department could hit its debt limit in the coming months are leading investors to shun certain Treasury bills as they seek out low-risk places to park cash.

In the physical market, gold consumption in the world’s largest gold-consuming nation grew 12% year-on-year over January-March.

Elsewhere, spot silver fell 0.2% to US$25.13 per ounce, while platinum rose 0.5% to US$1,087.51.

Palladium eased 0.1% to US$1,533.72.

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