US MIDDAY: gold falls

Gold fell 1 percent on Wednesday, falling further away from a 15-month high on pressure from the strong US dollar, which retreated from recent lows against the yen and euro as US trade and factory order data eased some worries. Spot gold was down 1 percent at $1,272.66 an ounce at 2:29 pm EDT (1829 GMT), extending losses below Monday's 15-month high above $1,300.
The US futures contract for June delivery settled down 1.3 percent at $1,274.40 an ounce. "It's a lot of dollar strength," said Anthem Blanchard, chief executive of Anthem Vault, precious metals dealer in Austin, Texas. "You have people running to Treasuries because of Fed speak. We're not really sure what the Fed is intending to do."
Atlanta Fed President Dennis Lockhart said on Tuesday the United States could see two more interest rate rises this year, while San Francisco Fed President John Williams said he would support a rate hike in June as long as he sees continued progress on the economy, inflation and jobs. The metal is up more than 20 percent this year as expectations had faded that the Federal Reserve would push ahead with US interest rate hikes.
Gold is highly exposed to interest rates and returns on other assets, as rising rates lift the opportunity cost of holding non-yielding bullion. A report by payrolls processor ADP showed that US private employers added 156,000 jobs in April, well below economists' expectations and the weakest gain in three years. Attention is now turning to Friday's non-farm payrolls report, a key barometer of the health of the US economy, with expectations that it will fall short of forecasts.
"A weaker US employment report on Friday will push gold prices back above $1,300," ABN Amro analyst Georgette Boele told the Reuters Global Gold Forum on Wednesday. "Speculative positions are in excessive territory but they could remain there for quite some time, meaning prices could go a lot higher before the correction starts."
Uncertainty over the timing of rate moves is keeping investors cautious on gold, helping limit any moves. "The difficulty gold is experiencing in staying above $1,300 does not necessarily mean the bull rally is ending. But the rally may be tired and in need of consolidation. This can trigger profit-taking," HSBC said in a note. Among other precious metals, silver was down 0.9 percent at $17.26 an ounce, while platinum was down 1.3 percent at $1,047.74 an ounce and palladium was down 1.6 percent at $595.80 an ounce.