Gold slid to a fresh low for the year on Thursday as another rise in U.S. bond yields and concerns over political risk in Italy held the dollar index near its 2018 peak.
The precious metal has fallen more than 2 percent this week on gains in the U.S. currency and a rise in U.S. 10-year Treasury yields to seven-year highs. Higher yields increase the opportunity cost of holding non-yielding assets such as bullion.
Spot gold was down 0.2 percent at $1,288.25 an ounce by 1145 GMT, off an earlier 4-1/2 month low of $1,285.41 an ounce. U.S. gold futures for June delivery were down $4.00 at $1,287.50.
“Gold prices are mainly driven by the U.S. dollar and then U.S. yields … our year-end 10-year U.S. Treasury forecast stands at 3.2 percent, with three more Fed rate hikes.”
The euro remains under pressure, hovering near a five-month low on concerns that political developments in Italy could cause wider disruption in the common currency bloc.
“Gold has eroded key support, namely the 200-day moving average, the $1,302.74 March low and the 50 percent retracement (of the December-to-January rally),” Commerzbank said in a note
“We have been forced to neutralise our outlook as the market is now on the defensive.”
Among other precious metals, silver was up 0.3 percent at $16.40 an ounce, having touched its lowest in two
weeks at $16.17 in the previous session.
Platinum was down 0.2 percent at $885.60 an ounce, off an earlier five-month low of $880.50, while palladium was 0.2 percent lower at $981.80 an ounce, Reuters reports.