Gold hits over one-week low as dollar holds firm

Gold prices touched the lowest in more than one week on Thursday, as the dollar stood firm on rising US Treasury yields, with investors focusing on who would replace Janet Yellen as the next chair of the Federal Reserve.
US President Donald Trump is set to make a decision in the "coming days" on Yellen, who is also one of the five candidates being considered for the job.
Spot gold eased 0.1 per cent to $1,279.25 an ounce as of 0646 GMT after earlier hitting its lowest since October 9 at $1,276.22. US gold futures for December delivery were down 0.1 per cent at $1,281.40 per ounce.
"With US yields continuing to creep slowly higher and stocks markets riding exuberantly high it will most likely take some sort of geopolitical event to break the yellow metal out of its bearish malaise," said Jeffrey Halley, senior market analyst with OANDA, in a note.
Short-dated US treasury yields on Wednesday jumped on expectations of tighter global monetary policy. The dollar on Thursday hit its highest in about two weeks versus the yen, supported by this week's rise in bond yields.
"Depending on how the dollar goes, we might look at $1,250-60 as the next stop for gold to trade down. We don't see immediate upward catalyst for gold except for North Korea," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.
US interest rates futures saw modest losses on Wednesday after the release of the Fed's Beige Book, but traders still saw an 80 per cent chance of the US central bank raising rates in December.
The economy expanded at a modest to moderate pace in September through early October, despite the impact of hurricanes on some regions, the Fed said its latest snapshot of the US economy.
"Looks like fundamentally the (US) economy is doing pretty well, so that will also put downward pressure on gold," Xu said.
Spot gold may drop more to $1,263 per ounce, as it has cleared a support at $1,281, Reuters technicals analyst Wang Tao said.
In other precious metals, silver was unchanged at $16.97 an ounce, while platinum fell 0.3 per cent to $915.10 an ounce and palladium was up 0.9 per cent at $960.75 an ounce. Platinum and palladium hit one-week lows earlier in the session. - Reuters