Gold prices retreat as U.S. dollar, bond yields tick higher

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Gold prices fell on Monday due to an uptick in the dollar and bond yields, while investors looked ahead to more U.S. economic data amid expectations of a slower pace of rate hikes from the Federal Reserve.

Spot gold fell 0.2% to $1,922.45 per ounce by 12:02 p.m. ET (1702 GMT). It climbed to its highest since April 2022 on Friday.

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U.S. gold futures were down 0.3% at $1,922.70.

“Bond yields ticked up slightly and the dollar has been going up here this morning – that’s just putting some pressure here on gold,” said Bob Haberkorn, senior market strategist at RJO Futures.

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“A lot of people will start hopping in when we see some support around $1,950 to see the inevitable move towards $2,000.”

The dollar index was up 0.1%, making dollar-priced gold less attractive for buyers holding other currencies, while benchmark yields were near session-highs.

Investors will be scanning the U.S. fourth-quarter GDP report on Thursday before the Fed policy meeting on Jan. 31-Feb. 1.

Traders are pricing in a 98% chance that the central bank will raise rates by 25 basis points (bps) next month, after slowing its pace to 50 bps last month, following four straight 75-bp hikes.

Zero-yield bullion tends to do well in a lower interest rate environment.

Meanwhile, India is expected to slash the import duty on gold, which could lift retail sales by making the metal cheaper ahead of peak demand season.

Elsewhere, spot silver dipped 2.8% to $23.27 per ounce, platinum fell 0.1% to $1,042.73 while palladium was down 0.7% to $1,715.75.

Analysts at Goldman Sachs said in a note that supply disruptions have partially reversed for both palladium and platinum, leading to a small surplus, but that surplus could “easily disappear if the expected recovery in South African mine production fails to materialize.” (Reporting by Seher Dareen in Bengaluru; Editing by Jane Merriman)