Gold prices fell 1% today, Thursday, after US Treasury yields and the dollar rose, with expectations for gold already declining, due to fears that the US Federal Reserve will resort to a larger interest rate hike this month to tackle rising inflation.
And gold in spot contracts fell 1%, to $ 1718.69 an ounce, by 0757 GMT. And gold futures in the United States fell 1% as well, to $ 1717.70.
The dollar hit a new record high in 20 years, hurting demand for gold priced in the US currency among buyers who own other currencies.
And US 10-year Treasury yields rose, denting the allure of gold, which does not yield a fixed return.
Data last night showed that the annual consumer price index in the United States jumped 9.1% in June, the largest rise in more than 4 decades.
The dollar’s rise pushed gold prices to their lowest level in nearly a year, on Wednesday, after the inflation report, but the decline in the US currency helped the precious metal achieve a sharp recovery, ending the session higher.
Expectations indicate that the Federal Reserve will intensify its moves to reduce inflationary pressures by raising the interest rate by 100 basis points, at its next policy meeting on July 26-27.
Although gold is seen as a hedge against inflation, higher interest rates are detrimental to its attractiveness, since it does not generate a fixed return.
And silver spot contracts fell 1.1%, to $ 18.98 an ounce. Platinum fell 1.5 percent to $841.96, and palladium fell 1.3 percent to $49.43.
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