Gold fell after fast growth data in China’s factory

The yellow metal prices declined on Wednesday as data showing a faster-than-anticipated growth in China’s factory activity weighed on the metal’s safe-haven appeal. At the same time, a rise in U.S. Treasury yields added further pressure.

Spot gold dropped by 0.1% to $1,683.56 per ounce, also pressured by a rising U.S. Treasury yields added further pressure. Higher returns from bonds boost the opportunity cost of holding non-yielding gold. U.S. bond yields had increased to a 15-month month high of 1.776% on Tuesday.

In the previous session, the yellow metal had dropped 0.5%, while silver fell by 1.7%

According to official data, China’s factory activity increased at a faster-than-expected pace in March. The rally started as factories closed for the Lunar New Year holiday continued production to meet improving demand.

Higher returns on bonds raise the opportunity cost of holding non-yielding bullion. Furthermore, U.S. consumer confidence rose in March to its highest level since the start of the coronavirus pandemic, supporting the view that economic growth will accelerate in the following months.

SPDR Gold Trust’s holdings increased by 0.1% to 1,037.50 tonnes

Federal Reserve policymakers are positive about the U.S. economic outlook. More U.S. people are vaccinated, and government aid gets to households and businesses.

According to IMF Managing Director Kristalina Georgieva, the International Monetary Fund will raise its forecast for global economic growth in 2021 and 2022 after last year’s 3.5% contraction.

Among other precious metals, the white metal was steady at $24.01. Meanwhile, platinum surged 0.5% to $1,160.05 and palladium boosted 0.7% at $2,607.04.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, announced its holdings increased by 0.1% to 1,037.50 tonnes on Monday, while it stood at 1,036.62 tonnes on Friday.

Gold traders will be closely watching the policy announcement in the United States, where President Joe Biden is expected to reveal his latest multi-trillion-dollar recovery plan for the world’s largest economy.