Gold prices fell to their lowest level in nearly two months on Thursday, mainly dragged by the strength of the dollar after data showed that US inflation remained steady, while expectations of more signals from the Federal Reserve also weighed on prices.
But a stronger dollar remained a major drag on metals markets, with the dollar rising to a one-year high on uncertainty over the long-term outlook for interest rates.
Spot gold fell 0.5% to $2,560.74 an ounce, while gold futures expiring in December fell 0.8% to $2,565.25 an ounce and spot gold was suffering an 8% decline from its record high set in October.
The losses in the yellow metal came on the heels of a sharp rise in the dollar and Treasury yields this week. The dollar’s rise intensified after data on Wednesday showed that US CPI inflation remained flat in October.
While the reading saw increased bets by traders on a December interest rate cut by the Federal Reserve, the longer-term outlook for rates has become more uncertain.
Markets were also bracing for a potential rebound in inflation on the back of expansionary and protectionist policies under the Trump administration, which are expected to keep long-term interest rates relatively high.
