Gold prices gained in Asia on Tuesday as safe-have demand for the precious metal came to the fore following a rout in US stocks that carried over into the region and sent Tokyo down as much as 5%, Overnight, gold prices remained under pressure as the dollar moved off lows after services data topped economists’ forecasts reaffirming investor expectation that bullish economic growth would strengthen the Federal Reserve’s case to raise rates more aggressively. Scotia bank said that upbeat ISM non-manufacturing data was a “strong plus for growth and the components are hawkish to the Federal Open Market Committee.” In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to interest-bearing assets such as bonds. Gold suffered its biggest weekly loss since December last week as data showed traders appear wary of increasing their bullish bets on gold.
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