Gold prices slipped from one-year highs on Thursday as the US dollar regained some ground, while investors awaited the US non-farm payrolls report to gauge the Federal Reserve's monetary policy strategy.
Spot gold was down 0.3 per cent at $2,014.26 per ounce in early trading after hitting its highest since March 2022 on Wednesday. US gold futures also fell 0.3 per cent to $2,029.80.
The US Dollar Index — a measure of the value of the greenback against a weighted basket of major currencies — rose 0.2 per cent, making bullion expensive for overseas buyers.
“This is a market due for some technical correction because the rally was very sharp,” said Ajay Kedia, director at Kedia Commodities in Mumbai.
The economic data points this week were major components supporting gold prices, he added, while also noting some profit-booking ahead of the Good Friday holiday.
Bullion has gained about 2.4 per cent so far this week, after a surprise oil output cut by Opec+. Weak US economic data over the week also added to fears of an economic slowdown, sending the yellow metal above $2,000.
Wednesday's data showed the US services sector slowed more than expected in March. Separate data showed new private sector jobs fell well short of expectations.
Investors now await Friday's non-farm payrolls report for March.
While gold is traditionally considered a hedge against inflation and economic uncertainties, higher interest rates dim non-yielding bullion's appeal.
Markets see a 54.8 per cent chance of the Fed staying put on interest rates in May, according to CME's FedWatch tool.
Cleveland Federal Reserve Bank President Loretta Mester said it was too early to know if the Fed would need to raise interest rates at its May policy meeting.
“The gold trade is getting a bit overcrowded but the macro backdrop still strongly remains firmly in its favour,” Edward Moya, senior market analyst at Oanda, said in a note.
Gold's immediate resistance is at the $2,050 level, he added.
Shoppers in Dubai gold souq - in pictures
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Shoppers explore the Deira Gold Souq in Deira. All photos: Khushnum Bhandari / The National -
The rich displays of the gold souq. -
A salesman adding pieces to the window display. -
Crowds brave the summer heat at the Deira souq. -
Anil Dhanak, founder of Kanz Jewellers, in the gold souq, Dubai. -
The gold souq in Deira, Dubai. -
Wares on display at the gold souq in Deira. -
Sales staff at Kanz Jewellers in the gold souq. -
A dazzling window display at the gold souq. -
A staff member adds pieces to a window display at the gold souq. It is a popular attraction for visitors to Dubai. -
Intricately crafted items fill a window at the souq. -
A shopkeeper makes sure that his windows gleam as much as the gold items on sale behind them. -
Window shopping at the gold souq. -
Vishal Dhakan, director of Dhakan Jewellers, stands behind his counter, surrounded by an array of gold items.
