Gold steadied on Thursday, giving up earlier losses as the dollar and US bond yields pared gains, following earlier pressure from strong US economic data and support from Federal Reserve Chair Janet Yellen for higher US interest rates.
Spot gold turned up 0.1 percent to $1,205.14 an ounce by 2:58 pm EST (1958 GMT), having dropped by 1.1 percent in the previous session, its biggest fall since December 15.US gold futures settled down 0.9 percent at $1,201.50. Better than expected jobs and housing data reinforced the view that the US economy is sufficiently robust to warrant rate rises, turning back recent falls for the dollar and pushing 10-year bond yields to their highest since January 3.
A strong dollar makes gold more expensive for holders of other currencies. Higher interest rates also mean that bond prices fall and yields rise, making such investments more attractive to those looking for safe-haven assets. Although gold is such an asset, it does not offer a yield to investors and costs money to store and insure.
"It looks like the dollar's rise is back on," said Georgette Boele at ABN Amro. "If you have a higher dollar combined with higher US treasury yields, that's not a good combination for gold prices." In other precious metals, silver was 0.14 percent lower at $16.99 an ounce, platinum eased by 0.6 percent at $956 and palladium was up 0.09 percent at $749.
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