Gold falls further away from 15-month high as dollar climbs
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, May 4 (Reuters) - Gold fell 1 percent on Wednesday, falling further away from a 15-month high on pressure from the strong U.S. dollar, which retreated from recent lows against the yen and euro as U.S. trade and factory order data eased some worries.
Spot gold was down 1 percent at $1,272.66 an ounce at 2:29 p.m. EDT (1829 GMT), extending losses below Monday's 15-month high above $1,300.
The U.S. futures contract for June delivery settled down 1.3 percent at $1,274.40 an ounce.
"It's a lot of dollar strength," said Anthem Blanchard, chief executive of Anthem Vault, precious metals dealer in Austin, Texas.
"You have people running to Treasuries because of Fed speak. We're not really sure what the Fed is intending to do."
Atlanta Fed President Dennis Lockhart said on Tuesday the United States could see two more interest rate rises this year, while San Francisco Fed President John Williams said he would support a rate hike in June as long as he sees continued progress on the economy, inflation and jobs.
The metal is up more than 20 percent this year as expectations had faded that the Federal Reserve would push ahead with U.S. interest rate hikes.
Gold is highly exposed to interest rates and returns on other assets, as rising rates lift the opportunity cost of holding non-yielding bullion.
A report by payrolls processor ADP showed that U.S. private employers added 156,000 jobs in April, well below economists' expectations and the weakest gain in three years.
Attention is now turning to Friday's non-farm payrolls report, a key barometer of the health of the U.S. economy, with expectations that it will fall short of forecasts.
"A weaker U.S. employment report on Friday will push gold prices back above $1,300," ABN Amro analyst Georgette Boele told the Reuters Global Gold Forum on Wednesday.
"Speculative positions are in excessive territory but they could remain there for quite some time, meaning prices could go a lot higher before the correction starts."
Uncertainty over the timing of rate moves is keeping investors cautious on gold, helping limit any moves.
"The difficulty gold is experiencing in staying above $1,300 does not necessarily mean the bull rally is ending. But the rally may be tired and in need of consolidation. This can trigger profit-taking," HSBC said in a note.
Among other precious metals, silver was down 0.9 percent at $17.26 an ounce, while platinum was down 1.3 percent at $1,047.74 an ounce and palladium was down 1.6 percent at $595.80 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Louise Heavens and Chizu Nomiyama)
