Investing.com - Gold prices traded slightly lower in mid-morning trade on Tuesday as positive economic data sent the dollar to its best level of the day against major rivals.
At 10:30AM ET (14:30GMT), gold futures for August delivery on the Comex division of the New York Mercantile Exchange slipped 70 cents, or 0.05%, to $1,296.60 a troy ounce.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.26% to 94.26, just off its intraday high of 94.29.
The greenback got a boost as U.S. data showed that the rate of growth in the economy's service sector accelerated again in May. The Institute of Supply Management said its non-manufacturing purchasing managers' index rose to 58.6 in May, from 56.8 the previous month.
Separately, job openings also unexpectedly increased to 6.698 million in April, hitting a fresh record high and beating expectations for a drop to 6.49 million, according to the Job Openings and Labor Turnover Survey released on Tuesday. Vacancies exceeded the number of unemployed workers amid a robust labor market, the Labor Department data showed.
A stronger greenback makes the dollar-denominated metal more expensive for holders of foreign currencies.
Market participants are keeping an eye on the economic backdrop as they wait for the Federal Reserve’s policy decision and updated economic projections next week. Fed fund futures already price in a 25 basis-point rate hike at the end of the two-day meeting on June 13, but traders are closely monitoring policymakers’ outlook to determine if there could be a fourth rate hike this year in December.
Higher interest rates tend to weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.
In other metals trading, silver futures gained 0.1% at $16.445 a troy ounce by 10:32AM ET (14:32GMT).
Palladium futures slid 1.7% to $977.10 an ounce, while sister metal platinum lost 0.8% at $896.30.
In base metals, copper traded up 1.3% to $3.175 a pound.