Gold prices dropped for a third day on Thursday, February 8, as a strengthening U.S. currency made dollar-denominated bullion more expensive for holders of other currencies.
A global stock market selloff has driven investors to the relative safety of the dollar, lifting it from 3-year lows and pushing gold from an 18-month high reached in late January.
“The same thing that pushed gold up in January is pushing it down in February – the dollar,” Commerzbank analyst Carsten Fritsch said.
Spot gold was at one-month lows, down 0.6 percent at $1,310.92 an ounce at 1139 GMT. U.S. gold futures for
April delivery were 0.1 percent lower at $1,313.30 an ounce.
Momentum indicators suggested gold would fall to $1,300, said analysts at ScotiaMocatta, with technical support at $1,303, the 50-day moving average.
Holdings of gold in exchange-traded funds tracked by Reuters have declined more than 1 percent this month and this week saw the biggest one-day fall since July, helping pull prices lower.
Also pressuring gold were comments by Federal Reserve officials that stock market turbulence was unlikely to derail interest rate rises this year.
Higher rates are negative for gold because they push bond yields higher, reducing the attraction of non-yielding gold, and tend to boost the dollar.
In other precious metals, silver was down 0.5 percent at $16.29 an ounce after touching $16.22, the lowest since Dec. 22.
Platinum traded at one-month lows, down 0.9 percent lower at $970.80 an ounce. Palladium was 0.5 percent lower at $979.20 an ounce after reaching its lowest since Nov. 15 at $976.97.
Having risen 56 percent last year to an all-time high in January, palladium, used in catalytic converters to control vehicle emissions, has fallen bellow technical support at its 55-day moving average and broken an 8-month uptrend, said analysts at Commerzbank, Reuters reports.