2021.05.0510:39:00UTC+00Gold Edges Lower In Choppy Trade

Gold prices fell in choppy trade on Wednesday as the possibility of higher U.S. interest rates supported the dollar.

Spot gold fell 0.8 percent to $1,777.96 per ounce, while U.S. gold futures were little changed at $1,777.20.

The U.S. dollar strengthened against its major counterparts in the European session after U.S. Treasury Secretary Janet Yellen suggested a rate hike in the near future to prevent the economy from overheating.

The interest rates may need to rise to prevent the economy from growing too rapidly as well as to contain inflation, Yellen said during an economic seminar presented by the Atlantic.

Later, she clarified that she wasn't trying to predict interest rate hikes to rein in inflation pressure and that any price increases would be transitory.

Upbeat PMI data from Europe also weighed on gold prices. The euro area private sector economy expanded further in April driven by gains in both manufacturing and service sectors, final data from IHS Markit showed.

The composite output index rose to 53.8 in April from 53.2 in the previous month. The flash reading was 53.7.

Manufacturing output advanced at a rate little-changed from March's survey record while services output returned to growth following seven months of continuous contraction.

Investors await April's ADP private payrolls data due at 8:15 am ET, which serves as a precursor to Friday's nonfarm payrolls data.