Gold prices touched five-month lows on Thursday, as the US dollar and Treasury yields gained momentum after recent upbeat economic data added weight to expectations that the Federal Reserve would carry on with its policy tightening.
Spot gold held its ground at $1,893 an ounce, as of 0335 GMT, having dropped to its weakest level since March 15 at $1,888.30.
US gold futures shed 0.3% to $1,922.60.
Minutes from the Fed’s July meeting showed “most” policymakers continued to prioritize the battle against inflation, while “some participants” cited risks to the economy of pushing rates too far.
Benchmark 10-year US Treasury yields hit a 10-month high, boosting the dollar to its highest level since mid-June and drawing investors away from non-interest-bearing gold.
“Whilst the FOMC minutes saw the US dollar and yields strengthen further to weigh on gold, there are tentative signs of stability for spot gold prices today,” said Matt Simpson, a senior analyst at City Index.
“I think we’re approaching a potential inflection point given US yields and the dollar index are hovering around key swing highs.”
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Reuters technical analyst Wang Tao says spot gold may fall to $1,879 per ounce, as it has broken two key supports.
“We expect to continue to see volatility in the gold price as the market continues to respond to commentary on US rates,” according to a note from NAB Commodities Research.
Upside to gold prices will likely need delivery of rate cuts expected in 2024, they added.
Recent solid US economic data has defied forecasts of a recession, reducing investors’ appetite for gold that is often sought as a safe store of value in times of economic turmoil.
In other metals, spot silver rose 0.3% to $22.46 an ounce and platinum gained 0.3% to $885.15, having touched its lowest levels since October. Palladium added 0.4% to $1,213.94.
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