Gold prices faltered on Thursday, under pressure from a stronger dollar as the U.S. Federal Reserve reaffirmed intentions to raise interest rates and trade tariffs between the United States and China kicked in.
The precious metal failed to confirm its brief break on Wednesday through $1,200 an ounce, a key psychological level, as the dollar resumed its ascent.
Spot gold was down 0.4 percent at $1,190 at 1431 GMT. Prices hit their highest since Aug. 13 at $1,201.51 in the previous session.
Minutes of the Fed’s latest policy meeting suggested the central bank is on course to raise interest rates further after two hikes this year, denting demand for non-interest-yielding gold.
“Gold has fallen victim to another round of dollar strength,” Saxo Bank analyst Ole Hansen said.
“The market needs to see that the trajectory of U.S. rate hikes is beginning to slow and that was not the signal in Fed minutes yesterday.”
In U.S. economic data, the number of Americans filing for unemployment benefits fell last week but sales of new single-family homes unexpectedly declined in July.
Meanwhile, trade tariffs imposed by the United States and China on each other kicked in on Thursday, benefiting the safe-haven U.S. currency, even as officials from the two sides resumed talks in Washington.
Amid shocks to the global financial system caused by the trade war, investors have opted for the safety of U.S. Treasuries and the U.S. currency, making dollar-denominated gold more expensive for holders of other currencies.
U.S. gold futures were down 0.5 percent at $1,197.40.
The dollar was up 0.2 percent against a basket of major currencies.
Markets are keeping a close eye on the Fed’s economic symposium in Jackson Hole, Wyoming, starting on Friday for any change in its stance, especially after U.S. President Donald Trump’s attack on its monetary policy this week.
Signalling further negative sentiment in gold was a record of net shorts in COMEX gold contracts.
First resistance is seen at the overnight high of $1,203.40 and then at this week’s high of $1,208.40. First support is seen at this week’s low of $1,189.60 and then at $1,180.00, Kitco Metals said in a note.
Spot silver was down 0.9 percent at $14.59, having touched a one-week low of $14.49 an ounce.
Platinum fell 1.5 percent to $780.40 an ounce, while palladium snapped a five-session winning streak, slipping 1.1 percent to $917. Palladium hit a three-week high at $928.50 on Wednesday.
