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Fed expected to raise rates by 25 bps in May
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Platinum, palladium slide over 3%
(Updates prices)
By Deep Kaushik Vakil
April 24 (Reuters) - Gold firmed on Monday, helped by a
weaker dollar, although prices were stuck in a tight range as
traders turned their attention to this week's economic data that
may influence the U.S. Federal Reserve's next policy decision.
Spot gold was 0.4% higher at $1,990.34 per ounce by
1:45 p.m. EDT (1745 GMT), while U.S. gold futures settled
up 0.5% at $1,999.80.
Prices turned positive after the Dallas Fed's report showed
manufacturing activity in Texas contracted in April,
highlighting the economic toll of the Fed's rate tightening
cycle.
"This market is treading water in the short term, waiting on
its next piece of economic data that could potentially jolt it
in one direction or the other," said David Meger, director of
metals trading at High Ridge Futures.
The U.S. dollar eased 0.5%, making the greenback-priced
bullion more appealing to overseas buyers. Gold dropped below $2,000 last week on Fed officials'
hawkish remarks and after surveys showed the U.S. and euro zone
business activity gathered pace in April.
Markets now expect a 91% chance of a 25-basis-point Fed hike
at its May 2 to 3 policy meeting, according to the CME FedWatch
tool.
Higher interest rates raise the opportunity cost of holding
non-yielding gold.
"While it will take a fresh catalyst to see the price return
above $2,000 an ounce, gold is unlikely to fall below $1,950 any
time soon," Kinesis Money analyst Rupert Rowling wrote in a
note.
Investors await a key Fed-favoured inflation gauge, the core
personal consumption expenditures index, as well as the U.S. GDP
quarterly growth rate, due this week. Platinum shed 3.4% at $1,085.91 an ounce and
palladium plunged 4.5% to $1,530.33.
This was due to profit-taking off of recent highs before
heading into an uncertain week-and-a-half of news, said Meger.
Silver rose 0.7% to $25.20.
(Reporting by Deep Vakil in Bengaluru
Editing by Tomasz Janowski, Josie Kao and Shilpi Majumdar)
