Spot gold edged down 0.3% to $1,910.10 per ounce by 1156 GMT
Gold prices fell on Tuesday as bullion’s appeal dimmed in the face of a stronger U.S. dollar and higher Treasury yields, while investors strapped in for key inflation data for further rate guidance on U.S. rates.
Spot gold edged down 0.3% to $1,910.10 per ounce by 1156 GMT, its lowest since Sept. 15, while U.S. gold futures fell 0.3% to $1,930.10.
“With the U.S. dollar once again on the front foot and yields edging to their highest levels since 2007, gold prices could well struggle to return to their recent peaks,” said Michael Hewson, chief market analyst at CMC Markets.
The dollar scaled near 10-month high levels while benchmark 10-year Treasury yields ascended a fresh 16-year peak, raising the opportunity cost of holding bullion, which is priced in dollars and does not yield interest.
Investors will closely watch the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, which is due on Friday.
“If we get a strong (PCE) number which keeps the prospect of a November rate hike on the table, then we could see a move back in gold prices towards $1,900,” Hewson added.
Minneapolis Fed President Neel Kashkari on Monday said the U.S. central bank would probably need to raise borrowing rates further and keep them high for some time to bring inflation back down to 2%.
Reflecting dwindling investor interest in bullion, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell on Monday to their lowest level since January 2020.
Providing a floor under gold prices despite a hawkish interest rate environment is the sustained central bank demand, analysts noted.
Silver dropped 0.5% to $23.01 per ounce, platinum shed 0.9% to a 12-day low of $902.82 and palladium slipped 0.8% to a 14-day low of $1,219.24.