Spot gold fell 2.1% to $ 1,807.60 an ounce, after hitting its lowest since Nov. 5 at $ 1,804.30. US gold futures fell 2.3% to $ 1,809.30.
“Gold was sold on the idea that perhaps the Federal Reserve would maintain its current monetary policy, as opposed to an appointment by Lael Brainard,” that would have been seen as opening a path to looser policy, said Jim Wyckoff, a senior analyst at Kitco Metals.
“But it’s just a knee-jerk reaction from the gold market,” Wyckoff added, with the dollar rising to its highest since July of last year. The news also sparked a jump in US Treasury yields.
A stronger dollar makes bullion more expensive for foreign buyers, Meanwhile he Increased interest rates translate into a higher opportunity cost of holding gold, which offers no returns.
Money markets They now expect the Federal Reserve to raise interest rates by 25 basis points for next June, whereas before they were betting on July.
“The upward movement in real yields has accelerated some of the weakness in gold, but it is too early for investors to think it is the beginning of a sustained trend.”said Edward Moya, a senior market analyst at OANDA brokerage.
Policy makers at the Federal Reserve are debating whether to withdraw support more quickly to deal with inflation, after one of its most influential officials noted that the idea will be on the table at the December meeting.
Gold has support around the $ 1,800 level and, with a shorter week, could consolidate between $ 1,800 and $ 1,850 ahead of the FOMC policy meeting on Dec. 15, according to Moya.
Silver was down 1.3% to $ 24.26 per ounce, platinum was down 1.7% to $ 1,013.45, while palladium was down 5.4% to $ 1,950.31