Gold falls 1% as higher dollar, yields weigh

By Seher Dareen

(Reuters) – Gold prices dropped 1% on Wednesday, after reaching a six-month peak in the previous session, as a stronger dollar and higher Treasury yields weighed.

Spot gold fell 0.6% to $1,803.16 per ounce by 1:50 p.m. ET (1850 GMT), after falling to $1,796 earlier in the session. U.S. gold futures settled down 0.4% at $1,815.8.

After the corrective pullback and profit-taking, the “outside markets on a daily basis have turned more bearish for the metals,” Jim Wyckoff, senior analyst at Kitco Metals, said, referring to the higher dollar and yields.

Both the dollar index and benchmark U.S. 10-year Treasury yields held near their session-highs, weighing on demand for bullion. [USD/][US/]

Gold has risen around $200 from a more than two-year low hit in September on expectations that the U.S. central bank would slow its pace of interest rate hikes, increasing the appeal of the non-yielding asset.

“I see aggressive hawkish monetary policy of the Federal Reserve being mostly factored into prices. You’re starting to see inflation back down a little,” Wyckoff added. “China is a real wild card right now.”

Bullion on Tuesday hit its highest since the end of June on news of China further easing quarantine restrictions, which could spark some gold buying in the top-consumer.

However, hospitals and funeral homes in the region were under intense pressure from surging COVID-19 cases.

Contracts to buy U.S. previously-owned homes fell far more than expected in November, largely due to the Fed’s interest rate hikes to curb inflation.

Traders now await Thursday’s U.S. weekly initial jobless claims data.

Spot silver dropped 2.2% to $23.5138 per ounce, platinum was down 1.1% to $1,008.39, while palladium fell 2.5% to $1,783.24.

(Reporting by Seher Dareen in Bengaluru; Editing by Barbara Lewis and Shailesh Kuber)