Gold prices drifted lower on Tuesday as the US dollar and Treasury yields climbed, with investors awaiting a key consumer inflation report for more cues on whether the Federal Reserve will hike interest rates once again this year.
Spot gold ticked down 0.1% to $1,913.25 per ounce by 0403 GMT, while US gold futures fell 0.2% to $1,932.20.
The dollar hit a 10-month high, while benchmark 10-year Treasury yields continued their ascent to a fresh 16-year peak, weighing on non-interest-paying bullion, which is priced in dollars.
Forecasts published on Wednesday showed that a majority of Fed policymakers see one more rate hike in the next three months, but investors continue to price in only about a 50% chance of further tightening in 2023.
“While we think appreciation in the US dollar will sustain to year-end, firmer expectations of rate cuts and slowing economic growth momentum will see the dollar dropping again next year,” ANZ analysts wrote in a note.
A Fed rate-hike pause should provide some support to gold, they said.
For interest rate clues, investors will focus on the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, due out on Sept. 29.
Spot gold may break a support of $1,913 per ounce, and fall into the $1,901-$1,908 range, according to Reuters technical analyst Wang Tao.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.1% on Monday to their lowest level since January 2020.
Among other metals, spot silver dropped 0.6% to $22.97 per ounce, platinum shed 0.5% to $906.12 and palladium slipped 0.3% to $1,225.41.
“Silver is facing a double whammy: expectations of a rise in US interest rates curbing its investment appeal and a weaker Chinese economy weighing on industrial demand,” ANZ analysts said.
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