Gold trades near seven-month low as US yields, Fed rate outlook weigh

Gold prices fell on Wednesday and hovered near a seven-month low touched in the previous session, as higher US Treasury yields, a stronger dollar and expectations of Federal Reserve rate hikes continued to weigh on bullion.

Spot gold was down 1.1% at $3,964.97 per ounce as of 0612 GMT. In the previous session, bullion had fallen to $3,942.99 per ounce, its lowest level since last November.

US gold futures for August delivery dropped 1.5% to $3,977.70.

Gold recorded its largest quarterly decline since 2013 on Tuesday and also fell for a fourth consecutive month in June, as Middle East tensions added to inflation concerns and strengthened expectations of tighter US monetary policy.

The dollar firmed, making bullion more expensive for holders of other currencies, while yields on the benchmark 10-year US Treasury note also moved higher.

Federal Reserve Bank of Cleveland President Beth Hammack said on Tuesday that she could support higher interest rates if inflation pressures do not ease, reinforcing expectations that the Fed may keep policy tight.

Traders are pricing in around a 67% chance of a September rate hike, according to the CME FedWatch Tool.

Investors are now awaiting US ADP employment data for June, due at 1215 GMT, followed by nonfarm payroll figures on Thursday, for further signals on the Fed’s rate path.

Oil prices rose after Iran said it would not meet senior US envoys who travelled to the region following recent hostilities. Qatar and Iran have also said no high-level US-Iran meetings are scheduled, reducing expectations of an early diplomatic breakthrough.

Among other precious metals, spot silver fell 2.1% to $57.34 per ounce, while platinum slipped 1.1% to $1,534.32, its lowest level since November 25. Palladium declined 1.2% to $1,189.69.