Gold fell for a fifth straight session on Thursday to hit its lowest level in eight weeks, pressured by a stronger U.S. dollar and rising Treasury yields amid uncertainty over the pace of the Federal Reserve’s interest rate cuts.
Spot gold was down 0.7% at $2,555.85 per ounce as of 0744 GMT, after hitting its lowest since Sept. 18 earlier in the session. U.S. gold futures fell about 1% to $2,560.90.
The U.S. dollar advanced to a one-year high, making gold more expensive for overseas buyers, while Treasury yield rose to its highest since July.
“For the time being, gold is just pushed around by the dollar and yields, which is creating this mechanical drop in the short term,” said Kyle Rodda, financial market analyst at Capital.com.
“While last night’s inflation data suggests that the Fed might be able to lower things slightly next month, the next year is being driven by expectations of higher inflation and, therefore, fewer rate cuts.”
Data released on Wednesday showed that U.S. consumer prices increased as expected in October, and progress toward low inflation has slowed in recent months.
Gold is considered a hedge against inflation, but higher interest rates dampen the appeal of holding the non-yielding asset.
Fed officials remain cautious about future rate cuts, citing potential risks to inflation.
While St. Louis Fed President Alberto Musalem expects inflation to gradually decline, Dallas Fed President Logan warned that excessive easing could reignite inflationary pressures.
Investors are awaiting U.S. Producer Price Index (PPI) and weekly jobless claims data, both due at 1330 GMT, as well as comments from Fed Chair Jerome Powell later in the day.
Spot silver fell 1.7% to $29.83 per ounce, its lowest level since Sept. 18. Platinum lost 0.7% to $931.30 and palladium dropped 0.4% to $929.85.
Reference:
Rahul Paswan in Gold declines to 8-week low on stronger US dollar, yields | Reuters
