Gold eased on Wednesday as the dollar climbed to a 14-year high against a currency basket, extending a week-long rally driven by a surge in Treasury yields after Donald Trump's election to the US presidency. The metal has shed more than $100 an ounce from last Wednesday's post-election high on the back of the sharp rise in bond yields and burgeoning appetite for risk.
Spot gold was down 0.2 percent at $1,225.06 an ounce by 2:05 pm EST (1905 GMT), while US gold futures for December delivery settled down 0.05 percent at $1,223.90. "It's consolidating the Trump action here above $1,200," said Joe Foster, portfolio manager and strategist of VanEck International Investors Gold Fund in New York.
"The dollar's a bit stronger today and gold's not changing much so that to me is a sign of base building and consolidation." Major banks and investors have begun to debate the possibility of another move towards parity between the dollar and the euro, as the US currency benefited from expectations of an inflationary push from the incoming Trump administration.
Investors resumed post-US election selling of bonds and buying stocks on Wednesday after a pause earlier this week, albeit less aggressively. Gold is also expected to be feeling the pressure from an imminent hike in US interest rates, which are tipped to rise for only the second time in nearly a decade next month.
It would need a surprise for the Federal Reserve not to raise rates in December, one of the US central bank's policymakers, James Bullard, told reporters at a banking conference on Wednesday. Investor appetite for gold remained slack, with the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, saying its holdings fell to a 4-1/2-month low on Tuesday. In the major physical markets, some Indian gold traders are placing bulk short-term import orders on fears that Prime Minister Narendra Modi might soon curb overseas purchases of the metal. Silver was down 0.8 percent at $16.94 an ounce while platinum turned up 0.9 percent at $943.5. Palladium climbed by as much as 2.2 percent to a six-week high at $721.40.
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