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NEW YORK: Gold retreated 1% on Tuesday as the dollar firmed, while investors positioned for US jobs numbers this week that could influence the Federal Reserve’s interest rate trajectory.

Spot gold was down 1% at $2,328.14 per ounce as of 1216 GMT. Gold reversed gains from a bounce late in the previous session following weaker US manufacturing data.

The latest fall in the safe-haven asset also came despite a dip in wider risk sentiment driven by the data. Investors now await Friday’s US non-farm payrolls data for clarity on US rate cuts. Lower rates reduce the opportunity cost of holding non-yielding bullion.

The reversal in gold can be attributed to a bounce back in the dollar, but the weaker US data has “created a window of opportunity” for the Fed to cut rates, said Ricardo Evangelista, senior analyst at ActivTrades. Making gold more expensive for overseas buyers, the dollar index was up 0.1%, after falling to its lowest since mid-April overnight.

However, near term, “with uncertainty around geopolitics and global economic growth alongside strong government purchases, there’s a good chance gold prices are likely to go back to the maximums reached a few weeks ago and even beyond,” Evangelista said. Gold hit an all-time high of $2,449.89 on May 20.

Traders also kept an eye on the results from elections in India, the world’s second biggest gold consumer. Gold demand will be subdued because of restrictions on cash transactions during the election period, but after that “we can expect some kind of pent-up demand because the wedding season is not yet over”, said ANZ commodity strategist Soni Kumari.

“If equities continue to crash, there will be some funds going into gold as well.” Silver fell 3.4% to $29.72 per ounce, platinum was down 0.3% at $1,008.55 and palladium lost 0.2% to $915.75.

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