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Gold falls to two-week low as higher dollar, yields dent appeal

Gold prices steadied on Thursday as investors digested comments from Federal Reserve Governor Christopher Waller on interest rate cuts and looked forward to more U.S. economic data for policy clues.

Sven Hoppe | Picture Alliance | Getty Images

Gold prices slipped 1% to their lowest level in more than two weeks on Wednesday, weighed by a stronger dollar and higher bond yields, while traders looked forward to U.S. inflation data due later this week.

Spot gold was down 0.8%, at $2,301.16 per ounce by 2:03 p.m. ET (1803 GMT), its lowest since June 10.

U.S. gold futures settled 0.8% lower, at $2,313.2.

“At this point, market may very well be responding to the firmer U.S. dollar and we continue to price in the possibility that the U.S. Federal Reserve is unlikely to move (interest rates) earlier in the summer,” said Bart Melek, head of commodity strategies at TD Securities.

The dollar rose 0.4% to a near two-month peak against its rivals, making gold more expensive for other currency holders, while benchmark U.S. 10-year yields hit a near two-week high.

The focus this week will be on the U.S. Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, which could shed light on the central bank’s interest-rate path.

Also on the radar are U.S. first-quarter gross domestic product estimates and a crucial debate between President Joe Biden and Republican rival Donald Trump on Thursday.

Data out on Tuesday showed U.S. consumer confidence eased in June amid worries about the economic outlook, but households remained upbeat about the labor market and expected inflation to moderate over the next year.

Fed Governor Michelle Bowman said on Tuesday that holding the policy rate steady “for some time” would probably be enough to bring inflation under control, but reiterated a willingness to raise borrowing costs if needed.

Higher interest rates increase the opportunity cost of holding non-yielding bullion.

Elsewhere, spot silver lost 0.1% to $28.88 per ounce, palladium slipped 2%, to $929.25, while platinum climbed 3.1%, to $1,011.88.

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