SINGAPORE — Gold was under pressure yesterday after disappointing data from both sides of the Atlantic fuelled concerns about global growth, while investors awaited a rate decision by the European Central Bank later in the day for more trading cues.
The dollar strengthened slightly against a basket of currencies as worries about a faltering eurozone economy offset concerns over a slower momentum in the United States recovery. A stronger greenback weighs on dollar-priced, commodities including gold.
“With the eurozone debt crisis threatening to flare up again, we can see some pressure on gold if the dollar rises,” said Lynette Tan, an analyst at Phillip Futures in Singapore.
“So far investors are still quite confident in the US economy, because over the past few months we have seen some pretty good data and last night’s numbers won’t weigh on markets too much.”
US companies hired the fewest people in seven months in April, said the ADP National Employment Report on Wednesday, just before the key April non-farm payrolls data scheduled to be released today.
Investors will closely watch a meeting by the European Central Bank (ECB) later in the day. The ECB is expected to hold fire despite calls to restart its bond-buying programme to shield austerity-hit Spain from further pain.
Spot gold edged down 0,4% to $1 646,81 an ounce, extending losses from the previous session.
US gold also inched down 0,4% to $1 647,70.
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Though gold is traditionally seen as a safe haven and attracts investors during economic and political turmoil, it has moved largely in tandem with riskier assets in recent months.
The inverse correlation-log between gold and the dollar stood at a negative 0,6, after hitting its tightest level in more than three months at negative 0,7 last month, as nervous investors pour into the dollar and US treasuries.
A reading at -1 suggests perfect inverse correlation — as the dollar appreciates, gold prices decline.
Asia’s physical gold market was quiet after an attempt to break above $1 670 triggered some scrap selling earlier in the week, dealers said.
“Initially there was some long liquidation or rather profit-taking,” said a Singapore-based dealer. “The very tight range doesn’t trigger much interest.”
Rupee-priced gold hit its highest level in more than four months earlier this week due to the weakness in the currency, dampening buying interest from
