Gold extends fall as strong dollar, higher US rates take toll

By Ashitha Shivaprasad

(Reuters) – Gold extended its decline for a sixth straight session on Monday to hit a near seven-month trough, as a robust dollar and prospects of higher U.S. interest rates took the shine off bullion.

Spot gold was down 0.9% by 1:52 p.m. EDT (1752 GMT) at $1,831.70 per ounce, its lowest level since early March. U.S. gold futures settled 1% lower at $1,847.20.

“There is a reckoning that interest rates are going to be higher for much longer, which has been the bearish element in the precious market. Gold prices could go below $1,800 in the near term,” said Jim Wyckoff, senior analyst at Kitco Metals.

“Trends in the currency markets tend to be stronger and longer-lasting. The appreciation of the U.S. dollar may not end anytime soon, pressuring the gold market.”

The U.S. dollar rose 0.6%, making bullion less attractive to other currency holders. [USD/]

Traders are pricing in a 55% chance that the Federal Reserve will leave interest rates at the current range of 5.25%-5.50% this year, according to CME’s FedWatch tool.

Federal Governor Michelle Bowman said she remains willing to support another increase in rates if incoming data shows progress on inflation is stalling or proceeding too slowly. Fed Vice Chair for Supervision Michael Barr, however, said rates are “at or near” sufficiently restrictive level.

Since powering above the key $2,000-per-ounce level in early May, gold prices have fallen more than 11%, or $230, pressured by a sharp rise in benchmark U.S. Treasury yields, which makes the non-yielding gold less attractive. [US/]

“The buying on dips (in gold) by central banks is now conspicuously absent,” said Tai Wong, a New York-based independent metals trader.

The market focus now shifts to job openings data, private hiring numbers and U.S. nonfarm payrolls over the course of the week.

Spot silver slid 4.2% to a more than six-month low of $21.23 per ounce.

Platinum fell 2.8% to $879.42 and palladium dipped 3.1% to $1,207.51.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Nick Macfie, Christina Fincher and Shilpi Majumdar)