Gold slid slightly on Tuesday as investors turned cautious after the metal failed to sustain a rally, while global stock markets rallied after Janet Yellen, Chairwoman of the Federal Reserve, expressed the strength of the U.S. economy regardless of weak May jobs report.
Based on the positive economic numbers, the Chairwoman on Monday said they will increase interest rates, but investors focused on her lack of guidance on when they would actually raise the interest rate. Yellen said she is fairly sure the U.S. economic conditions will improve enough to warrant another increase in interest rate.
"Federal Reserve chair Yellen was cautious in her remarks on the shocking payrolls reading, which reinforced that June is not the month to make a move. The slightly dovish remarks sat well with financial markets, prompting a rally in equities," said Bernard Aw, a market strategist at IG in Singapore. "While the message Yellen wants to across is that she still wants to move rates higher, the timing of subsequent rate hikes is murky."
"Yellen was pretty noncommittal - she didn't give a timeframe for rate rises," said Robin Bhar, analyst at Societe Generale."There's a bit of indecision here. We had the knee jerk reaction on the non-farm payroll numbers, and now gold is hesitating over where to go."
Spot gold was down 0.5 percent at $1,238.81 an ounce, while gold futures for June delivery were down $6.00 an ounce at $1,241.40.
As for other precious metals, silver was down 1.2 percent at $15.98 an ounce, platinum was down 0.08 percent to $989.75 and palladium was 2.2 percent lower at $543.54.
Among other global stock markets, Europe got off to a strong start with Britain's FTSE 100 up 0.6 percent to 6,312.16. Germany's DAX jumped 1.9 percent to 10,307.93 while France's CAC 40 rose 1.4 percent to 4,485.76.
Japan's Nikkei 225 rose 0.6 percent to 16,675.45 while South Korea's Kospi gained 1.3 percent to 2,011.63. Hong Kong's Hang Seng Index advanced 1.4 percent to 21,328.24. Stocks in Taiwan, Singapore and Indonesia also rose.