PRECIOUS-Gold falls from 2-mth high as dollar strength dents safe-haven appeal

  • Reuters
  • Forex News
PRECIOUS-Gold falls from 2-mth high as dollar strength dents safe-haven appeal
Credit: © Reuters.

* Silver eases off two-month high

* Fed's Powell says U.S. economy is "not out of the woods yet"

* Spot gold may test resistance at $1,802/oz - technicals (Recasts, adds comments, chart, updates prices)

By Shreyansi Singh

May 4 (Reuters) - Gold prices fell from a more than two-month high on Tuesday, as a rebound in the dollar dented the metal's safe-haven appeal, while investors speculated that a swifter than expected U.S. economic recovery might prompt an interest rate hike.

Spot gold XAU= was down 0.4% at $1,786.10 per ounce by 0702 GMT, after hitting its highest since Feb. 25 at $1,797.75 on Monday.

U.S. gold futures GCv1 fell 0.4% to $1,785.50.

"A strong dollar is the primary reason for the slight correction," said Hareesh V., head of commodity research at Geojit Financial Services, adding that sustained strength in the greenback is likely to weigh on bullion.

The dollar index .DXY rose 0.3%, making gold less attractive for other currency holders. USD/

Federal Reserve Chairman Jerome Powell said on Monday the U.S. economy is doing better, but it is "not out of the woods yet". this stage, it doesn't really seem particularly market moving for the Fed to repeat the status quo... the market is now starting to consider when the time for an alternative is going to come," DailyFX currency strategist Ilya Spivak said.

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

Higher interest rates increase the opportunity cost of holding non-yielding bullion.

Investors now await April payrolls data due later this week for further cues on the U.S. economy's health. gold may test a resistance at $1,802 per ounce, and a break could lead to a gain to $1,816, according to Reuters technical analyst Wang Tao. TECH/C

Elsewhere, palladium XPD= rose 0.1% to $2,973.29 per ounce, after scaling an all-time high of $3,007.73 on Friday.

Silver XAG= was down 0.3% at $26.79, after hitting its highest since March 1 on Monday, while platinum XPT= was steady at $1,230.49.

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