Gold prices held steady on Thursday after hitting a more than one-month low, pressured by the increasing likelihood of a US interest rate hike in December and as a new tax plan boosted the dollar on the back of stronger economic data.
Platinum, meanwhile, was trading at a discount to palladium for the first time since 2001 on waning demand for diesel cars.
“Higher US yields and continued strength in the US dollar post-President Trump’s tax announcements has eroded gold’s asset appeal in the absence of geopolitical sabre rattling in the last couple of days,” said Jeffrey Halley, senior market analyst at OANDA.
Spot gold was nearly unchanged at $1,280.26 per ounce at 10.31am after it hit its lowest since 25 August earlier in the session. US gold futures for December delivery fell 0.3% to $1,283.30 per ounce.
“In the near term, we’re still looking at interest rates for direction,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. “There is a 75% chance for a rate hike in December now and unless North Korea does something, I think gold will be under pressure.”
France’s foreign minister said on Wednesday that Donald Trump’s verbal jousting with North Korea was perhaps not the best method to handle the nuclear crisis and urged the US president to focus his attention on raising diplomatic pressure on Pyongyang.
The dollar and US bond yields rose on Thursday after President Trump proposed the biggest US tax overhaul in three decades and as strong economic data added to the case for a rate hike by the US Federal Reserve later this year.
A stronger dollar makes bullion more expensive for holders of other currencies, while higher interest rates lead to higher bond yields and dampen demand for non-yielding gold.
In other precious metals, platinum dipped 0.1%, to $915.50 per ounce after hitting its lowest since 20 July, while palladium declined 0.3% to $923.65 per ounce. Palladium hit price parity with its better-known sister metal platinum on Wednesday for the first time since 2001, as demand expectations for the two assets diverge.
Platinum is more heavily used in diesel vehicles that have fallen out of favour since 2015’s Volkswagen emissions-rigging scandal. Palladium has benefited from the switch to petrol engines and expectations for growth in hybrid electric vehicles, which tend to be gasoline-powered.
Silver fell 0.2% to $16.71 per ounce, after dropping to $16.72 per ounce, its lowest since 16 August. Reuters