Spot gold was 0.4 per cent lower at $1,991.16 per ounce and set for its biggest daily decline since November 10 and U.S. gold futures settled 0.4 per cent down at $1,991.30
Gold prices dropped below the key $2,000 per ounce level on Wednesday as the U.S. dollar bounced back from lows and Treasury yields pared losses, while expectations that the Fed will pause rate hikes limited the slide in bullion.
Spot gold was 0.4 per cent lower at $1,991.16 per ounce by 2005 GMT and set for its biggest daily decline since November 10. U.S. gold futures settled 0.4 per cent down at $1,991.30.
The dollar index has rallied to its daily highs and that is limiting some buying interest in gold, said Jim Wyckoff, senior analyst at Kitco Metals, adding that conflicting market forces are making for a steady holiday-type trade.
The dollar index gained 0.3 per cent against its rivals, while Treasury yields pared losses after a strong initial jobless claims data unsettled a market that expects the Fed to start cutting rates around June as the U.S. economy slows.
Lower interest rates typically bolster gold prices as they lower the opportunity cost of holding non-yielding assets. Bullion reached a three-week high of $2,007.29 in the prior session.
The increase in the markets expectations for Fed cutting cycle to commence earlier in 2024 has been the prime force driving gold prices up over the past week, said Daniel Ghali, commodity strategist at TD Securities.
Fed officials agreed at their last policy meeting that they would proceed “carefully” and only hike interest rates if progress in controlling inflation faltered, according to minutes of the October 31-November 1 meeting.
In other metals, spot silver dropped 0.4 per cent to $23.66 per ounce. Platinum lost 1.2 per cent to $923, while palladium shed 2 per cent to $1,056.91, both eyeing their biggest daily decline since November 10.
