LONDON: Gold prices fell on Thursday as the dollar rose after hopes faded for an US fiscal stimulus package before the presidential election, denting bullion's appeal as a hedge against inflation.
Spot gold was down 0.1% at $1,899.46 per ounce by 9:45 a.m. EDT (1345 GMT). US gold futures fell 0.2% to $1,903.40.
"A lot of concerns about the stimulus in the short term, and the strength in the dollar, is causing the gold market to sell off a little," said Jeffrey Sica, president and chief investment officer of Sica Wealth Management.
The dollar rallied against rivals after US Treasury Secretary Steve Mnuchin on Wednesday said that a deal on a relief package would be hard to reach before the Nov. 3 election.
Meanwhile, an unexpected rise in US weekly jobless claims also did not help gold.
But "the jobless numbers showed that we're not out of the woods yet, that we still have a lot of headwinds we've to contend with, which points to the likelihood of more government intervention through stimulus and suppressed interest rates," Sica said. Gold, considered a hedge against inflation, currency debasement and uncertainty, has gained 25% this year, driven by massive global stimulus to cushion economies from the pandemic-induced slump.
"While we don't expect a deeper consolidation to take place, a close below $1,870/oz would catalyze a selling program which could potentially mark peak capitulation as even systematic trend followers would be set to liquidate some gold length," TD Securities analysts said in a note.
Among other metals, silver fell 1.2% to $23.99 per ounce, platinum slipped 0.4% to $853.64 and palladium climbed 0.1% to $2,345.72.
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