Gold nears six-month low on rising dollar

Gold steadied on Thursday, though prices hovered near a six-month low hit in the previous session due to an elevated dollar and treasury yields, with markets awaiting US economic data for clues on the Federal Reserve’s rate trajectory.

Spot gold held its ground at $1,874.49 per ounce by 4.35am GMT after shedding 1.4%, its biggest daily decline since July, on Wednesday. US gold futures were flat at $1,891.30.

Data on Wednesday showed orders for long-lasting US manufactured goods rose in August and business spending on equipment appeared to regain momentum.

“Durable goods [figures] were higher than expected — that’s why the 10-year [treasury yield] was higher, that’s why the dollar also moved higher, and that’s why we saw selling pressure for gold,” said Hugo Pascal, a precious metals trader at InProved.

The dollar hit a 10-month high against its major peers, while treasury yields climbed a fresh 16-year peak as investors bet the US economy will outperform its competitors in an environment of high interest rates.

Minneapolis Fed President Neel Kashkari said on Wednesday it is not clear yet whether the US central bank is done raising rates amid ample evidence of ongoing economic strength.

Higher rates raise the opportunity cost of holding bullion, which is priced in dollars and does not yield any interest.

Market focus now turns to the revised US GDP growth rate for the second quarter and weekly jobless claims due later in the day, with the August personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, due on Friday.

Meanwhile, top congressional Republican Kevin McCarthy on Wednesday rejected a stopgap funding bill, bringing closer the fourth partial US government shutdown in a decade.

Spot silver eased 0.2% to $22.48 per ounce, while platinum edged up 0.1% to $888.25.

Palladium fell 0.2% to $1,219.83, set to fall for a sixth consecutive session, if losses hold.

Reuters