Gold dips as hawkish U.S. Fed lifts dollar, yields

(Reuters) - Gold prices fell to a more than one-month low on Thursday as the dollar and U.S. Treasury yields jumped after hawkish remarks from Federal Reserve Chair Jerome Powell, denting the non-yielding metal’s appeal.

FILE PHOTO: A machine engraves information on an ingot of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk

Spot gold was down 0.3% at $1,629.97 per ounce by 1:49 p.m. ET (1749 GMT), after falling more than 1% earlier, hitting its lowest since Sept. 28.

U.S. gold futures settled 1.2% lower at $1,630.9.

“I don’t see the tide turning for gold and it gathering bullish momentum again until after the Fed is done raising rates, probably not till March of 2023,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The U.S. central bank raised interest rates by 75 basis points on Wednesday as expected. Powell said it was “very premature” to think about pausing and that the peak for rates would likely be higher than previously expected.

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

The dollar rose 1.4%, making gold more expensive for overseas investors. Benchmark U.S. 10-year Treasury yields were close to their recent peak. [USD/] [US/]

“We could see further losses (in gold) towards the September lows and a possible break of the $1,600 level, if yields continue to rise,” said Michael Hewson, chief market analyst at CMC Markets UK.

Focus now shift to U.S. non-farm payrolls data for October due on Friday, which could offer more clarity on the Fed’s rate-hike trajectory.

Offering some respite to gold, data showed the U.S. services industry grew at its slowest pace in nearly 2-1/2 years in October, suggesting the Fed’s rate hikes are slowing demand in the overall economy.

Spot silver rose 0.9% to $19.45 per ounce, platinum fell 0.5% to $925 while palladium fell 2.4% to $1,811.15.

Reporting by Seher Dareen in Bengaluru; Editing by Maju Samuel and Shinjini Ganguli