by Ranjeetha Pakiam and Thomas Biesheuvel, MineWeb.com:
Gold advanced for the first time in ten days to snap its longest selloff in more than a year before data from the US that may determine the timing of monetary policy tightening.
Bullion for immediate delivery rose as much as 0.8% to $1 214.63 an ounce, before trading at $1 211.44 by 11:28am in London, according to Bloomberg generic pricing. Prices dropped to $1 199.80 on Monday, the lowest intraday level since February 17, and are down 6.4% this month, set for the biggest monthly decline since November.
Gold has slumped in May, trimming this year’s rally, as Federal Reserve chair Janet Yellen indicated that an interest-rate increase may be warranted in the coming months. Bets on a rate hike have risen to 30% for June and the odds are more than even for an increase by July, according to Fed funds futures.
Investors are looking to US figures on personal spending and income due for release on Tuesday, as well as key jobs data on June 3. Yellen is scheduled to speak in Philadelphia on June 6. The Bloomberg Dollar Spot Index, was little changed on Tuesday and has climbed 3.5% this month, heading for its biggest monthly gain since September 2014.
“Some kind of bounce-back is not unusual,” Georgette Boele, an Amsterdam-based strategist at ABN Amro Bank, said by e-mail. “In addition, the US dollar did not rally further. A strong report including higher hourly earning could further result in an increase of the odds of rate hike in June or July.”
Boele said that while ABN still see an upward trend for the precious metal, more hawkish Fed comments will make further gains difficult.
Tuesday’s rally may be due to traders thinking recent declines are overdone, said Ric Spooner, chief analyst at CMC Markets in Sydney. The nine-day drop sent gold’s 14-day relative strength index, a gauge of momentum, toward 30, indicating the metal is oversold.
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