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Gold trades below US$1,300 as dollar rally damps investment demand

SINGAPORE — Gold held two days of losses as the dollar rebounded on prospects of a US interest-rate increase next month, dimming the metal’s appeal as an alternative investment.

SINGAPORE — Gold held two days of losses as the dollar rebounded on prospects of a US interest-rate increase next month, dimming the metal’s appeal as an alternative investment.

Bullion for immediate delivery traded at US$1,282.41 (S$1,735) an ounce at 9.47am in Singapore from US$1,286.50 on Tuesday (May 3), when it retreated 0.4 per cent, according to Bloomberg generic pricing. The metal slid 0.2 per cent on Monday after climbing to US$1,303.82, the highest intraday level since January 2015.

Prices have rallied 21 per cent this year, recovering from three years of losses, as investors returned to haven assets amid concern a deteriorating global economy may delay the end of low borrowing costs in the US The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rallied from a one-year low on Tuesday as Federal Reserve Bank of Atlanta chief Dennis Lockhart called a June interest-rate increase “a real option”, while his San Francisco counterpart John Williams said he would support such a move if the US economy stayed on track.

“Even though gold has retraced slightly, I am still bullish for this week,” said Mr Raymond Mok, head of foreign exchange and bullion development at Sucden Financial (HK) Ltd. “A weaker dollar and lower expectation of a rate hike” will be supportive of gold, he said.

Investors currently see a 12 per cent chance of policy makers raising US borrowing costs in June, according to pricing in interest-rate futures contracts. Officials including St Louis Fed chief James Bullard are due to speak this week. BLOOMBERG

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