Gold prices on Wednesday retreated from a near five-month high scaled in the previous session, as the US dollar and Treasury yields firmed on the back of robust manufacturing data, reports Reuters.
Spot gold was down 0.2 per cent at $1,895.58 an ounce, as of 0914 GMT on the day, after hitting its highest since January 08 at $1,916.40 on Tuesday.
US gold futures eased 0.3 per cent to $1,898.80 per ounce.
The firmer dollar is weighing on gold, and "we're probably seeing some profit-taking," Commerzbank analyst Daniel Briesemann said.
"Many market players have opened long positions in gold in the last few weeks, as can be seen by the CFTC statistics. But now it appears that at least some of these positions have been closed again, keeping gold in check," Briesemann added.
Making gold more expensive for investors holding other currencies, the dollar index rose on data that showed a pick-up last month in US manufacturing activity.
The US 10-year Treasury yields held firm, increasing the opportunity cost of holding bullion, which pays no interest.
However, Commerzbank's Briesemann said bottlenecks in the supply chain and rising commodity prices could limit US manufacturing growth potential, and that the Federal Reserve is paying attention to labour market data. Investors were also awaiting US payrolls data due on Friday to gauge cues on future monetary policy.
"As for the precious metals' outlook in the short-term, it depends on how global inflation data develops and how central banks, mostly the US Federal Reserve, respond to it," IG Market analyst Kyle Rodda said.
