Gold prices fell on Thursday as the dollar strengthened on growing expectations of a Federal Reserve rate hike in December following positive US economic data.
Spot gold was down 0.2 per cent at $1,185.55 an ounce by 0606 GMT. It had dropped 2 per cent in the previous session to touch its lowest in 9-1/2 months at $1,181.45.
US gold futures eased 0.3 per cent to $1,185.60 per ounce.
Fed policymakers appeared confident on the eve of the US presidential election that the economy was strengthening enough to warrant interest rate increases soon, minutes from the Fed’s November 1-2 meeting showed.
“There is a downtrend for gold prices due to interest rate hike expectations,” said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
He added that he saw a “100 per cent” chance of a rate increase in December.
“Some of the largest ... investment figures have been winding down their long positions in gold in the past quarter. We are going to see many more followers. It is not a good idea to trade for a rebound in prices,” To said.
New orders for US manufactured capital goods rebounded in October, driven by rising demand for machinery and a range of other equipment, the latest indication of an acceleration in economic growth early in the fourth quarter.
Recent positive economic data has been pressuring gold prices as investors raise bets on a US interest rate hike that would increase the opportunity cost of holding non-yielding bullion, while boosting the dollar.
Investors are now pricing in a nearly 100 percent probability of a December Fed rate increase, according to CME FedWatch, and some investors expect more hikes in 2017 if the economic momentum is sustained.
The dollar index, which measures the greenback against a basket of currencies, was on Thursday near its highest in 14 years, a level that it touched overnight.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.47 per cent to 891.57 tonnes on Wednesday from Tuesday.
Holdings have declined over 5 per cent so far this month.
Gold prices have dropped nearly 12 per cent from a high of $1,337.40 per ounce, hit on November 9, when Donald Trump was announced US president-elect.
“Since no one particularly anticipated the move post the Trump win, the position cutting on the long-side has been swift on the downside,” said Amit Kumar Gupta, research head at Adroit Financial Services, adding that the market has piled into the U.S dollar and equities.
“Technically, $1,172 will act as support, below which the down move could be aggressive.”
Spot silver fell 0.6 per cent to $16.26 an ounce. Platinum dropped over 1.3 per cent to $918.40, while palladium edged up 0.2 per cent to $734.40.