Gold fell Thursday as a firmer U.S. dollar and rising Treasury yields weighed on bullion, with spot prices slipping 0.7% to $4,368.81 an ounce. Traders are now watching fresh U.S. inflation data for clues on next week's Federal Reserve meeting, while gold-backed ETFs posted their second-largest monthly inflow on record in August.
Spot gold fell 0.7% to $4,368.81 an ounce on Thursday, while gold futures slipped 1.1% to $4,411.20 an ounce. The metal has hovered near $4,400 in recent weeks after rebounding from a floor near $4,000 in July.
Yields and the dollar pressure bullion
U.S. 10-year Treasury yields rose after the government's latest plan to buy as much as $6 billion of longer-dated debt underwhelmed analysts who had expected repurchases of up to $10 billion. Higher yields can weigh on gold because bullion pays no interest.
Meanwhile, the dollar index bounced from its weakest level in two weeks, and a stronger greenback tends to dampen gold's appeal to overseas buyers. Oil added to the inflation backdrop: Brent crude reached $100 a barrel for the first time since July, a move that threatens to keep inflation elevated and could push central banks to raise interest rates in response.
According to ING: "The risk is that escalation starts leading to meaningful disruptions to Strait of Hormuz flows."
Inflation data comes ahead of the Fed decision
Markets are turning to fresh inflation readings for a steer on prices ahead of next week's Fed meeting. U.S. producer prices grew as expected in August, largely because of surging energy costs, with a separate consumer price reading due Friday. Markets are pricing about a 64% probability of a quarter-point Fed rate hike this month, according to CME FedWatch.
Gold ETFs post record inflows
Elsewhere, investor demand for gold has firmed. Global gold-backed ETFs attracted $18 billion in August, their second-largest monthly inflow on record, the World Gold Council said. Holdings rose by 121 tonnes to a record 4,189 tonnes, while assets under management climbed 16% to $615 billion. North American funds recorded their third-largest monthly inflow on record, while European-listed funds posted their largest ever monthly inflow.
Source: Investing.com
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