XtreamForex

Gold dips in Asia

gold price

Gold dips in Asia as geopolitical tensions take back seat

Gold prices dipped slightly in Asia on Wednesday with no fresh support triggers in regional tensions on the Korean peninsula and caution ahead of tax plan detailsexpected from the U.S. later in the day that if approved by Congress could set the pace for interest rate hikes this year by the Fed.

Gold for June delivery on the Comex division of the New York Mercantile Exchange eased 0.12% to $1,265.75 a troy ounce, while copper futures on the Comex fell 0.35% to $2.590 a pound.

Overnight, gold prices edged lower on Tuesday, despite a slump in the dollar, as investors continued to favour riskier assets for the second straight day.

Gold dropped to its lowest level in two-weeks, as risk on sentiment continued to dominate asset flows, after recent polls pointed to an easy victory for pro-EU candidate Emmanuel Macron in the runoff vote for the French presidency, scheduled for May 7.

Gold failed to capitalize on a broad based dollar selloff, as the dollar index fell for a second straight day pressured by a strong rally in the euro.

Meanwhile the release of mixed U.S. economic data failed to stem the slump in gold prices, as new U.S. home sales rose to an eighth-month high in March while consumer confidence fell in April.

New U.S. home sales surged to an eight month high in March, which added to the narrative of a strengthening U.S. economy.

The Consumer Confidence Index dropped to 120.3 in April, compared to expectations of a fall to 122.5 for the month.

The decline in gold prices came amid a rally in U.S. treasury yields as investors’ expectations grew that the Federal Reserve was poised to increase its benchmark rate in June. The yield on the benchmark U.S. 10-Year traded higher at 2.314, up 1.74%.

According to investing.com’s Fed rate monitor tool, nearly 63% of traders expect the Fed to hike interest rates in June, compared to 33.7% the previous week.

Gold is sensitive to moves in U.S. interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.