Bullion Gold prices rose Tuesday on a weaker dollar despite upbeat U.S. economic data suggesting inflationary pressures were building, raising the prospect of further rate hikes.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange rose by $5.50 or 0.42%, to $1,302.90 a troy ounce.
ISM non-manufacturing data for May showed an uptick to 56.8, beating expectations for 55.7.
While the ISM non-manufacturing paid index rose to its highest since 2017, adding to a recent string of positive data suggesting inflationary pressures were gathering momentum.
Non-manufacturing data was “strong”, with new orders and business activity both rising, and added that the rise in the prices paid component of the index continued a string of other data “showing prices pressures are building.”
The upbeat data temporarily boosted the dollar but its gains were pared following a rise in the euro on easing political concerns in Italy. While reports the European Central Bank could announce at its meeting next week, a possible date, when it will cease buying asset also bolstered the single currency.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A fall in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand for the precious metal.
In other precious metal trade, silver futures rose 0.60% to $16.53 a troy ounce, while platinum futures rose 0.08% to $904.20 an ounce.