Gold prices pared losses on weaker-than-expected US economic data on Tuesday, after falling 1 percent on renewed expectations of an increase in US interest rates next month that pushed the dollar higher. Spot gold was down 0.2 percent at $1,235.85 an ounce by 3:23 pm EST (2023 GMT), but has gained more than 7 percent since the start of the year. US gold futures settled down 0.02 percent at $1,238.90.
The dollar strengthened after Federal Reserve members pointed to the potential for higher US rates next month, making commodities priced in the currency more expensive for non-US buyers. Bullion rebounded above its lows after data showed the US Purchasing Managers Index (PMI) was at 53.9 in February, down from 55.6 in January and expectations for 55.8. "The Fed was pretty hawkish on the weekend but the PMI was lower than expected," said Bob Haberkorn, senior market strategist for RJO Futures in Chicago.
"It's kind of known the Fed's going to do something in March but it's like gold is second guessing that a bit." "Gold is capped by the likelihood that US monetary policy will be tighter at some stage, potentially in March," Societe Generale analyst Robin Bhar said. "There is a lot of political uncertainty, there are safe-haven flows going into gold."
Elsewhere, silver fell 0.4 percent to $17.94 an ounce, platinum lost 0.3 percent to $997.95 and palladium gained 0.6 percent to $776.75.