Singapore: Gold was trading close to a three-month high on Monday, buoyed by a weaker dollar and more soft US data that triggered hopes the Federal Reserve would not hike interest rates soon. Spot gold was little changed at $1,223.95 an ounce, not far from a three-month peak of $1,227.04 reached last week. As of Friday, gold had risen for four straight days in its longest winning streak since March.
The metal has been supported in recent days by sluggish US economic data, which has hurt the dollar and altered expectations regarding the Fed's monetary policy. The dollar languished around a three-month low against the euro in early Asian trade on Monday, after weak data on U.S. industrial production and consumer sentiment. "In addition to constructive technicals, we see no change in our weaker dollar outlook; this in turn should continue to provide an element of support to commodities in general and to gold in particular," said INTL FCStone analyst Edward Meir.
The weak data bolstered views the economy was not recovering strongly enough for the US central bank to raise rates from record lows. This has supported non-interest-paying bullion, which would have seen demand decline with higher rates. Markets had earlier expected the Fed to act in June.
Economists cut their forecasts for US economic growth in the second quarter and full year, and trimmed expectations for US labour market gains, according to the Philadelphia Federal Reserve's quarterly survey. Investors are now awaiting minutes of the Fed's April policy meeting, due on Wednesday, for clues on the central bank's opinion on the economy and when it could raise rates.
Dovish minutes from the Fed and more soft US data could send gold to $1,250, said Howie Lee, an analyst at Phillip Futures. In news on investor positioning, hedge funds and money managers increased net long positions in silver and gold in the week ended May 12, US Commodity Futures Trading Commission data showed on Friday. Hedge fund Paulson & Co kept its stakes unchanged in most of its gold investments in the first quarter, when the precious metal's price pared its gains, a filing with the US Securities and Exchange Commission showed.
