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Gold under pressure despite downbeat economic data

5/2/2017, 10:41:31 AMBasics of Trading
Gold under pressure despite downbeat economic data

Gold prices declined nearly 1% on Monday, as bearish economic data failed to offset news that U.S. congressional leaders reached an agreement to keep the government afloat.

Gold for June delivery on the Comex division of the New York Mercantile Exchange shed $11.66, or 0.92%, to $1,256.59 a troy ounce by 13:57 EDT.

Gold failed to mount a recovery from a 1% drop, as sentiment shifted towards risker assets, following news that the U.S. government averted a government shutdown.

Negotiators in the U.S. Congress agreed a deal on $1 trillion spending package on Sunday to keep the Federal government funded through to September 30.

Meanwhile, weaker than expected manufacturing and construction spending data failed to weigh on sentiment.

The Institute for Supply Management (ISM) said its index of national factory activity dropped to a reading of 54.8 last month, the weakest reading since December, from 57.2 in March.

In a separate report, the Commerce Department said U.S. construction spending slipped 0.2 percent for the month of March. Analysts' had forecast a slower decline to 0.4% from 1.8% a month earlier.

Meanwhile, U.S. Treasury Secretary Steven Mnuchin comments on Monday, dampened demand for the flight to safely trade, after he said that it will probably take two years for the U.S. economy to achieve 3% growth, and highlighted the Trump administration’s tax reform and regulatory relief plans as key catalysts to induce economic growth.

Mnuchin’s comments had a little impact on the dollar, which traded in positive territory, bouncing off session lows.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.05% to 98.94 by 18:05 EDT.

The stronger dollar weighed on dollar-denominated commodities as silver futures slumped 2.13% to $16.895 a troy ounce while platinum fell by 1.69% to $932.65.

Copper gained 2.09% to $2.662 while natural gas dipped 2.20% to $3.203.