Gold fell on Tuesday as the dollar rose and investors sold on expectations of stronger global economic growth and higher US interest rates, while deadly incidents in Turkey and Germany failed to spur safe-haven buying.
Spot gold was down 0.7 percent at $1,131.18 an ounce by 2:51 pm EST (1951 GMT), after hitting a session low at $1,125.23, not far from last week's 10-1/2-month low of $1,122.35, its lowest since early February. US gold futures settled down 0.8 percent at $1,133.60.
Gold prices came off their session lows as the US dollar pared gains from 14-year highs. The greenback was buoyed by comments from Federal Reserve Chair Janet Yellen that reinforced expectations for a faster pace of US interest rate increases next year than had been expected. "Chair of the Fed Yellen yesterday reinforced Fed rate hike plans and headwinds persist for gold holders for now," said George Gero, managing director at RBC Wealth Management.
"It's all about the dollar as usual; also higher bond yields are not only anti-inflationary but competitive to gold holders." Rising US rates could mean further gains for the US currency, which when it rises makes dollar-denominated commodities more expensive for holders of other currencies. "The Fed was more hawkish than we expected ... But it is surprising not to see some safe-haven buying after the events in Berlin and Turkey," said Societe Generale analyst Robin Bhar.
Investor confidence in the global economy is reflected in holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which at 26.624 million ounces on are down more than 13 percent since November 9. Silver turned up 0.3 percent at $16.02 an ounce after tapping $15.59, its lowest since April. Platinum also turned higher and was up 0.2 percent at $918.40. Palladium lost 1.8 percent at $664.75 an ounce after reaching $660.97, its lowest since November 9.