Gold fell on Thursday as a drop in US weekly initial jobless claims, ahead of the monthly jobs data later this week, boosted Treasury yields and stoked bets that the US Federal Reserve may soon start winding down its economic support.
Spot gold fell 0.4% to $1,755.68 per ounce by 9:32 a.m. EDT (1332 GMT), breaking out of a tight range seen for most of the Asian and European sessions.
US gold futures fell 0.5% to $1,753.30.
The number of Americans filing new claims for jobless benefits fell last week.
“That report helped to push bond yields up and rally the US stock market a little bit, pressuring gold,” Jim Wyckoff, senior analyst with Kitco Metals.
Reduced stimulus and higher interest rates lift bond yields, translating into increased opportunity costs of holding non-yielding bullion.
Gold prices ease on uptick in US Treasury yields
Also, the US debt limit is likely being pushed to December. So, that was a calming effect on the marketplace, bullish for stocks and bearish for gold, Wyckoff added.
The dollar held near a one-year high, buoyed by lingering inflation concerns and expectations the Fed would have to act sooner to normalise policy.
While gold is traditionally considered an inflation hedge, a stronger dollar makes it more expensive for holders of other currencies.
A strong showing of private jobs in September ahead of Friday’s employment numbers also encouraged bets that the Fed could start tapering soon.
But given the “record high” number of open job positions in the United States, a “positive surprise on the non-farm payrolls should be adjustable for the gold market without causing a major sell-off”, Julius Baer analyst Carsten Menke said.
Spot silver fell 0.5% to $1,753.30 per ounce, platinum fell 0.4% to $980.51 and palladium climbed 1% to $1,907.64.