Gold retreats on comeback in U.S. dollar, yields

(Reuters) - Gold prices slipped more than 1% on Wednesday, weighed down by a jump in the dollar and U.S. Treasury yields in the run up to U.S. jobs data that could influence the Federal Reserve’s rate hike path.

FILE PHOTO: Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk

Spot gold was down 0.8% at $1,712.93 per ounce by 1:52 p.m. ET (1752 GMT), after hitting a three-week peak at $1,729.39 on Tuesday.

U.S. gold futures settled 0.6% lower at $1,720.80 per ounce.

“We’re seeing a resurgence in the dollar and yields, as a result, we’ve seen a pullback in gold after a pretty aggressive move higher over the course of the last several sessions,” said David Meger, director of metals trading at High Ridge Futures.

Making gold less appealing for other currency holders, the dollar gained over 1% against its rivals, after posting its worst day since March 2020 on Tuesday. Benchmark U.S. 10-year Treasury yields also climbed. [USD/] [US/]

Data showed U.S. private employers stepped up hiring in September, suggesting demand for workers remains strong despite rising interest rates and tighter financial conditions.

Focus now shifts to the U.S. Labor Department’s closely watched nonfarm payrolls data for September on Friday.

“The Fed is very much focused on the jobs market right now. We’ve seen little hints as to slowdown in manufacturing. However, if we do see a better-than-expected jobs number, that may be disappointing to the gold market,” Meger said.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

Spot silver dropped 2.7% to $20.54 per ounce, after rising to a three-month peak in the previous session.

“Silver had previously been significantly undervalued vis-à-vis gold. Its undervaluation now is no longer so pronounced,” Commerzbank analysts said in a note.

Platinum fell 1.5% to $915.97 per ounce, and palladium dipped 2.8% to $2,250.67.

Reporting by Brijesh Patel in Bengaluru; Additional reporting by Bharat Govind Gautam; Editing by Maju Samuel and Krishna Chandra Eluri