Gold prices fell on Friday and were set for a second weekly decline as US Treasury yields rose to multi-year highs following strong labour market data and hawkish comments from Federal Reserve officials, denting the bullion’s appeal.
Spot gold fell 0.3% to $1,622.66 per ounce, as of 0343 GMT and has shed about 1.2% this week. US gold futures were down 0.5% to $1,629.20.
The benchmark 10-year Treasury yields scaled a fresh peak since June 2008, while the dollar index ticked 0.1% higher.
“The Fed is only about halfway through their tightening cycle and there’s probably more room for rates to go up,” said Stephen Innes, managing partner at SPI Asset Management, adding, gold would likely continue to drop.
The market will keep a watch on inflation and jobs data and if they bring forward the markets estimate for a pause that will drive gold higher, Innes added.
Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week, indicating the labour market remains tight.
A separate data showed US existing home sales dropped for an eighth straight month in September.
Remarks from Philadelphia Federal Reserve President Patrick Harker suggesting the central bank will “keep raising rates for a while” to curb inflation, prompted investors to brace for another supersized hike at Fed’s November meeting.
Although gold is considered a hedge against inflation and economic turmoil, rapid rise in US interest rates have increased the opportunity cost of holding the bullion, which yields nothing.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.19% to 930.99 tonnes on Thursday.
Spot silver fell 0.7% to $18.53 per ounce, platinum lost 0.6% to $908.19 and palladium dipped 0.3% to $2,052.17.
All the three metals were, however, set for weekly gains.
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