Gold prices remained close to three-week lows on Thursday as a stronger-than-expected increase in U.S. private payrolls in July boosted the dollar and bond yields, fueling speculations of tighter monetary policy.
Spot gold was relatively stable at $1,935.20 per ounce by 0100 GMT, while U.S. gold futures eased slightly to $1,970.90. The U.S. dollar index reached a 4-week peak, and 10-year Treasury yields were at their highest since November. After data showed a rise of 324,000 jobs in U.S. private payrolls last month, exceeding forecast of 189,000.
Although markets mostly ignored Fitch’s U.S. credit rating downgrade, investors expressed concerns about the country’s debt position, political polarization, and the dollar’s global standing.
Gold is typically considered a safe investment during uncertain economic times. But it loses appeal when interest rates rise due to its lack of interest yield.
The Bank of England is expected to raise interest rates to a 15-year high on Thursday. With inflation remaining high in major economies. Additionally, Nornickel, the world’s largest palladium producer, reported that Asia had become its largest revenue market.
Palladium prices fell 0.5% to $1,237.19 an ounce, while spot silver and platinum also dropped to their lowest levels in about three weeks.