Gold rises on dollar pullback; clarity on Fed policy awaited

Gold prices rose on Tuesday after two sessions of losses as the dollar eased, while investors sought more clarity on the U.S. Federal Reserve’s monetary policy stance.

Spot gold was up 0.2% at $2,001.09 per ounce, as of 0457 GMT. U.S. gold futures rose 0.2% to $2,011.10.

“Given the sharp moves of late and little tier-1 economic data to guide this week, we should expect gold to consolidate in the $1,980-$2,020 range,” said OCBC FX strategist Christopher Wong.

The U.S. dollar index was 0.1% lower and made bullion cheaper for overseas buyers.

Gold prices fell to around a two-week low on Monday after data showed manufacturing activity in New York state increased for the first time in five months, and confidence among U.S. single-family homebuilders improved for a fourth straight month in April. The data added to bets of an interest rate hike by the Fed at its May meeting.

The CME FedWatch tool shows that markets are pricing in a 86.7% chance of a 25 basis point hike in May.

Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates dim the non-yielding bullion’s appeal.

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