By Elise Mak
Investing.com – Gold prices continued to fall on Wednesday in Asia as the dollar was supported by robust U.S. data.
Gold futures traded 0.35% lower to $1,972 by 12:25 PM ET (5:25 GMT), while the dollar inched up 0.03% to 92.365.
Prices of the precious metal slid back down to below $1,980-mark after a small peak the day before. Gold prices marched towards $2,000 on Monday thanks to the dollar’s decline to multiyear lows.
But the better-than-expected U.S. manufacturing data released overnight restored hopes for economic recovery. The ISM manufacturing Purchasing Managers Index (PMI) for August came at 56, above the predicted 54.5 and better than the 54.2 in July.
“The manufacturing number came out much better than expected and that’s what caused gold to pare back its gains, and (also) gave little strength to the dollar,” Bob Haberkorn, senior market strategist at RJO Futures, told Reuters.
Similarly, China and Japan showed an uptick in manufacturing on Tuesday. In China, the Caixin manufacturing PMI for August rose to 53.1 from 52.8 in July, while Japan’s manufacturing PMI went up to 47.2 in August from 45.2.
That said, the dollar remained weak this week on inflation expectations, hovering below 92.5. Analysts believe gold will remain supported in the near term.
"[The better data] doesn’t necessarily change the picture for the U.S. Federal Reserve. The trend (in gold) is still higher,” Haberkorn added.