NEW YORK: Gold fell in choppy trading on Wednesday as the dollar rose and on growing confidence that the U.S. Federal Reserve would soon begin winding down its economic support measures.
Spot gold fell 0.3% to $1,728.20 per ounce by 10:27 a.m. ET (1427 GMT). U.S. gold futures were down 0.4% at $1,730.00.
The appreciating dollar is limiting gold’s upside, said Jim Wyckoff, senior analyst at Kitco Metals.
A stronger dollar makes the metal more expensive to holders of other currencies.
He added if “stock markets become unstable again, gold could see better safe-haven demand entering the historically turbulent month of October.”
The dollar, an alternate “safe haven”, traded near a 11-month high against rival currencies, even though a deadlock in Washington over the U.S. debt ceiling threatened to plunge the government into a shutdown.
If the government does start to shut, “a safe-haven bid could come to the gold and silver markets,” Wyckoff added.
Providing some respite to gold, 10-year U.S. Treasury yields eased, although they held above 1.5%, levels not seen since late June, still posing a challenge for bullion.
“As yields continue to rise on expectations of sooner-than-expected rate hikes by the Fed, this could translate to more losses for zero-yielding gold,” FXTM analyst Lukman Otunuga said. Gold fell to a one-and-a-half month low on Tuesday.
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