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Gold retreats from 2-month high

May 05, 2021 00:00:00

LONDON, May 04 (Reuters): Gold on Tuesday retreated from the previous session's more than two-month high on a stronger dollar ahead of a slew of US economic data.

Autocatalyst metal palladium held firm near record highs hit last week on supply concerns. Spot gold was down 0.4 per cent at $1,785.26 per ounce by 0925 GMT on Tuesday, after hitting its highest since February 25 at $1,797.75 on Monday.

Carlo Alberto De Casa, chief analyst at ActivTrades, said technical factors were curbing strength in gold, while "the US dollar's recovery is making it more complicated".

"We have two important support levels at $1,765 and $1,750, while a clear surpass of $1,800 would open up space for bullion," De Casa said.

The dollar index rose 0.5 per cent as investors weighed chances that US interest rates will be forced higher by a roaring US economic recovery. An expensive dollar makes gold less attractive for other currency holders.

The US central bank wants to keep monetary policy loose for the foreseeable future, but the economic recovery gaining pace has fanned speculation of a pull-back in support sooner than expected.

Higher interest rates increase the opportunity cost of holding non-yielding bullion. Investors are now awaiting US services data due on Wednesday and April payrolls data on Friday for further clues on the US economy's health.

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