Gold Falls After Two-Day Surge With Fed Rate Stance In Focus

(Bloomberg) -- Gold slid toward $1,700 an ounce as traders weighed whether the US central bank may moderate its hawkish stance after the release of weak US data.

The metal fell as much as 1.3% on Wednesday as the dollar and Treasury yields rose, after gaining almost 4% in the previous two sessions. A worse-than-expected US manufacturing gauge and a decline in US job openings had helped push bullion up through the key $1,700 price level, marking a shift in market sentiment.

The weaker economic prints have heightened expectations the Federal Reserve may slow its aggressive rate-hiking path, which would increase the appeal of gold that doesn't offer any interest. Still, data from the ADP Research Institute showed US firms hiring at a solid clip, an indication the jobs market remains strong.

“The fact that the US dollar should ease during the course of next year points to a higher gold price again,” Commerzbank AG analysts including Thu Lan Nguyen said in a note. “This is because the Fed is unlikely to raise its interest rates any further after the first quarter of 2023.”

Focus will also be on the reaction of Fed officials to the data. Neel Kashkari and Raphael Bostic both speak later on Wednesday, though neither vote on monetary policy this year.

Spot gold declined 0.8% to $1,712.69 an ounce as of 1:52 p.m. in London. The Bloomberg Dollar Spot Index gained 0.7% following Tuesday's 1% slide. Silver, platinum and palladium fell.

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