Bullion rides on soft dollar pummeled by disappointing US data

NEW YORK/LONDON — Gold rose 1% on Tuesday after disappointing US data hit the dollar and dampened expectations that the Federal Reserve will hint at this week’s policy meeting at an interest rate hike in the coming months.

Spot gold climbed 1.1% to a three-week high of $ 1,215 after the data showed US consumer confidence dropped in April to its lowest since December. It was up 0.9% at $1,212.13 an ounce at 2:42 p.m. EDT (1842 GMT) after a 2% rise on Monday, while US gold futures for June delivery settled up $10.70 an ounce at $1,213.90. The dollar fell 0.8% to an eightweek low against a basket of leading currencies following the unexpectedly weak US consumer confidence report. Traders said this supported gold prices.

Some recent data suggests “the Fed is going to be pushed back longer into a tightening posture,” said Eli Tesfaye, senior market strategist for RJO Futures in Chicago.

“Market participants have no choice but to go ahead and bid gold.”

Mr. Tesfaye said that increasingly positive technical factors also attracted buyers, with $1,124 as the next target level.

Recent sluggish economic data from the US led the market to expect the Fed will probably not act until later in the year. A rate hike could dent demand for bullion as investors’ appetite for non-yielding assets diminish.

The statement following the Fed’s two-day meeting is scheduled for release on Wednesday.

“Market participants are focusing on the Fed meeting on hopes of some hints on when the Fed will raise interest rates,” Commerzbank analyst Daniel Briesemann said. “However, I don’t think we will get any surprising news tomorrow.”

In the physical markets, demand for gold eased as the price neared the key $1,200 level.

China’s gold imports from Hong Kong dipped in March to their lowest level in seven months, according to data released on Tuesday.

SPDR Gold Trust, the world’s largest gold- backed exchange- traded fund, said its holdings fell 0.44% to 739.07 tons on Monday, the first decline in two weeks.

Among other precious metals, silver rose 1.5% to $16.60 an ounce after a 4.3% gain in the previous session, boosted by gold’s advance.

Platinum turned up 0.4% to $ 1,153 an ounce after a 2.3% jump on Monday, while palladium rose 0.1% to $ 778.50 an ounce.