Gold retreats as U.S. data eases economy worries

Wed May 2, 2012 2:38am EDT
 
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By Rujun Shen

SINGAPORE (Reuters) - Gold edged down on Wednesday after hitting a two-week high in the previous session as upbeat U.S. manufacturing data soothed worries about the economy and dampened hopes of further monetary easing.

Spot gold edged down 0.4 percent to $1,654.89 an ounce by 02:14 a.m. EDT (0614) GMT, after rising to $1,671.20 in on Tuesday.

U.S. gold also lost 0.4 percent to $1,656.

After a recent run of weak data, the Institute for Supply Management said that U.S. manufacturing grew in April at the fastest pace in 10 months, easing concerns the world's largest economy had lost momentum at the start of the second quarter.

Stronger economic growth will lessen the need for the U.S. Federal Reserve to further ease monetary policy, and dent investor appetite in bullion which benefits from low real interest rates.

Investors are shifting their focus to the U.S. non-farm payrolls data due Friday, and closely watching the European Central Bank rate decision Thursday as well as weekend elections in France and Greece.

"Gold will probably be sitting in limbo for a few more days," said Nick Trevethan, senior metals strategist at ANZ in Singapore, "It is rather inversely sensitive to positive numbers, as evidenced by the ISM number overnight."

He added that the weaker Australian dollar as a result of a surprise rate cut by the Reserve Bank of Australia on Tuesday triggered some selling by producers, as gold in Aussie dollar terms rose to a three-week high.   Continued...

 
Figurines in 24K gold are displayed at a Chow Tai Fook Jewellery store in Hong Kong December 6, 2011. REUTERS/Bobby Yip