Gold drifts lower from 6-month highs on dollar uptick
Gold prices on Wednesday fell from last session’s six-month peak as the dollar firmed and Treasury yields remained elevated, while investors weighed worsening COVID situation in top bullion consumer China.
Spot gold was down 0.7% at $1,800.49 per ounce by 0954 GMT, having hit its highest since end-June on Tuesday. U.S. gold futures dropped 0.9% to $1,807.50.
The dollar index gained 0.1% and benchmark 10-year yields held close to their highest levels in more than a month.
Gold is placed between $1,790 and $1,830 and waiting for a new market driver, said Carlo Alberto De Casa, external analyst at Kinesis Money.
Bullion has risen nearly $200 from a more-than-two-year low in late September on expectations that the U.S. Federal Reserve would slow its pace of interest rate hikes, increasing the appeal of the non-yielding asset.
“(If) COVID situation worsens again in China, this can be potentially negative for gold. But, at the same time can push (central) banks to be more dovish – and that would be positive for gold,” De Casa added.
China on Monday scrapped its COVID-19 quarantine rule for inbound travelers even as hospitals and funeral homes were under intense pressure as a surging COVID-19 wave drained resources.
As such, the dollar’s performance, inflation data, Fed’s rate hike path, developments in China and geo-political tension will be major factors influencing gold prices in 2023, said Hareesh V., head of commodity research at Geojit Financial Services.
Traders await U.S. pending home sales report due later in the day, and Thursday’s initial jobless claims.
In other precious metals, spot silver slipped 1.7% to $23.6451 per ounce, platinum eased 0.3% to $1,017.05.
Palladium dropped 1.1% to $1,809.80. (Reportin by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru Editing by Vinay Dwivedi)
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