Gold prices dip, dollar recovers ahead of data-heavy week

By Ambar Warrick

Investing.com -- Gold prices pulled back on Monday as markets locked in some profits after a strong first quarter, with focus now turning to a slew of U.S. economic readings this week for more cues on monetary policy.

Bullion prices surged over 7% in the first three months of the year, although a bulk of gains came in March amid growing fears of a U.S. banking crisis. While government intervention calmed market concerns over an imminent collapse, the yellow metal has still remained relatively underpinned by safe haven demand. 

This spurred some profit taking on Monday, although gold still remained less than $100 from a 2020 record high.

Spot gold fell 0.5% to $1,959.03 an ounce, while gold futures fell 0.5% to $1,975.60 an ounce by 22:20 ET (02:20 GMT). 

Focus is now on a slew of U.S. economic readings this week, starting with manufacturing activity data for March, due later on Monday. The reading is expected to show that the U.S. manufacturing sector remained in contraction territory for a fifth straight month. 

But the main point of focus will be nonfarm payrolls data for March, due on Thursday. Traders will be watching for any more signs of weakness in the labor market, which could open the path for a less hawkish Federal Reserve this year. 

Such a scenario bodes well for gold, which largely overtook the dollar as a preferred safe haven over the past month. This was also driven in part by expectations that the Fed will taper its hawkish stance to avoid further pressure on the banking system.

The dollar rose on Monday as it recovered from steep losses in March. This, coupled with some strength in Treasury yields, weighed on metal markets. 

Platinum futures sank 0.5%, while silver futures fell nearly 1%.

Among industrial metals, copper prices fell on more signs of weakening manufacturing activity in major importer China.

Copper futures fell 0.4% to $4.0663 a pound.

A private survey showed on Monday that manufacturing growth in China slowed sharply in March, as a post-COVID economic boom runs out of steam. This points to an uneven economic recovery in the country, which could dent its appetite for commodities.