Gold at 5-month low as higher yields, rate-hike bets dominate mood

By Brijesh Patel

(Reuters) – Gold prices slipped to a five-month low on Thursday as factors such as rising Treasury yields, a firm dollar and a hawkish view on interest rates from Federal Reserve officials weighed on investor sentiment.

Spot gold was down 0.3% at $1,886.10 per ounce by 1:53 p.m. EDT (1753 GMT), its lowest level since March 13.

U.S. gold futures settled 0.7% lower at $1,915.20.

“Gold has been down over the course of the last several sessions due to rising interest rates and bond yields,” said David Meger, director of metals trading at High Ridge Futures, adding, “we did see a bit of bargain-hunting at these levels.”

“We noticed yesterday in response to the FOMC minutes the market portended that the Federal Reserve still might need to be a bit more aggressive than previously expected in regards to continuing to raise rates.”

Minutes of the Fed’s July 25-26 meeting on Wednesday showed most policymakers continued to prioritize the battle against inflation, while few participants cited risks to the economy if rates were pushed too high.

The expectation that U.S. interest rates will likely be higher for longer boosted benchmark 10-year U.S. Treasury yields to their highest since October, making non-yielding bullion less attractive for investors. [US/]

Also hurting gold, the dollar held close to its highest level in two months. [USD/]

Data showed the number of Americans filing new claims for unemployment benefits fell last week, pointing to a still tight labor market.

“Markets are looking for cracks in the U.S. labor market to really change the current trajectory and until such time, bullion may remain under pressure,” DailyFX analyst Warren Venketas wrote in a note.

Silver gained 1.1% to $22.64 an ounce, its biggest daily increase since July 31, while platinum rose 1% to $890.81. Palladium edged 0.4% higher at $1,213.76.

(Reporting by Brijesh Patel and Deep Vakil in Bengaluru; Editing by Keith Weir and Shilpi Majumdar)