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Gold fell 1 per cent to its lowest in 9-1/2 months in Asian trade on Friday, heading for a third consecutive weekly decline, on expectations of a Federal Reserve rate hike and as the dollar extended its bull run against the yen.
Spot gold was down 0.4 per cent at $1,178.64 an ounce by 0604 GMT. Earlier in the session, the metal dropped 1 per cent to mark its lowest since February 8 at $1,171.21 per ounce.
US gold futures fell about 1 per cent to $1,177.9 per ounce, after dipping earlier to its lowest since February 5 at $1,170.30 per ounce.
The dollar rose to an eight-month high against the yen on Friday as US bond yields resumed their rise in Asia after the Thanksgiving break shut markets in the United States.
The 10-year US Treasury note yield rose about 5 basis points to 2.405 per cent from the previous close on Wednesday. “The dollar has been really strong this morning and is pushing high. The Shanghai arbitrage is trading $25 dollar premium, which seems to be suggesting that there is selling from Asia rather than buying,” an investment bank trader said.
Bullion shed over 8 per cent so far this month and has lost over $160 an ounce since the peak after the US election on November 9, hurt by a strong dollar and surging Treasury yields as investors bet on higher growth and inflation under US president-elect Trump.
The metal has also been pressured by talks of an almost certain US interest rate hike in December.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
“The dollar is firm and triggering some selling (in gold). There were some stops around $1,180 and they were all taken," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
'“There has been some physical buying, but that is not so strong and is not helping gold,” Leung added.
Spot gold is expected to drop to $1,172 per ounce, as the support at $1,184 does not look to hold, according to Reuters technical analyst Wang Tao.
Silver rose 0.55 per cent to $16.34 an ounce. Platinum slid 0.45 per cent to $909.40, after having earlier hit its lowest since February 8 at $901.00. Both metals were on track to post a third straight weekly decline.
Palladium dropped 0.5 per cent to $725.45.
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