Gold prices were trading slightly lower during Tuesday's Asian deals, easing back from Monday’s six-week highs as the $4,250 level once again acted as stiff resistance.
By 4:10 pm AEDT (5:10 am GMT), spot gold had fallen 0.4% to US$4,217.71 per ounce.
Despite the pullback, gold continued to attract buyers near the $4,200 region, supported by concerns over the health of the United States economy and expectations that the Federal Reserve is preparing to cut interest rates next week.
Fresh data on Monday showed U.S. manufacturing contracted for a ninth consecutive month in November, with the ISM manufacturing PMI falling to 48.2 from 48.7. Economists had expected 48.6.
Meanwhile, market pricing reflects an 87.2% probability that the Fed will cut rates by 25 basis points at its December meeting, according to the CME Group FedWatch Tool.
Adding to the cautious tone, rising Japanese government bond yields have provided a floor for gold. Japan’s 30-year yield surged to a record high, while the 10-year yield hit its highest level in 17 years, amid speculation that the Bank of Japan could raise rates as early as this month.
Gold failed to hold Monday’s six-week peak as U.S. Treasury yields climbed, with traders reassessing the Fed’s likely policy stance beyond December.
Investors also remain watchful for potential dissents within the Federal Open Market Committee at next week’s meeting, a factor that could keep gold price action constrained.
Attention now shifts to Wednesday’s US ADP employment change report and the ISM services PMI, which are expected to offer further direction for markets.
