Gold prices fell to their lowest level in three months, Thursday, as dealers await the second day of the testimony of Federal Reserve Chairman (US Central Bank) Jerome Powell before Congress, which affirmed on its first day yesterday his adherence to his position on raising interest rates.
By 1325 GMT, spot gold fell 0.6 percent to $1920.40 an ounce. US gold futures fell 0.7 percent to $1,931.40.
Gold trimmed some of its losses for a short period after data showed that US jobless claims settled at their highest level in 20 months last week, in what may be an early indication of labor market weakness in the face of the US central credit tightening, but gold quickly fell.
Powell told lawmakers that the expectation of further rate hikes is a “very good guess” of where the US central bank is headed if the economy remains on its current path.
And the rise in interest rates leads to a decline in the attractiveness of the yellow metal, which does not yield a return.
Markets see a 72 percent chance that the US central bank will raise interest rates by 25 basis points next month, according to CME’s Fed Watch tool.
The dollar index rebounded from its lowest level in more than a month yesterday. A weaker dollar usually makes gold more attractive to overseas investors.
As for other precious metals, spot silver fell 0.7 percent to $22.49 an ounce, and platinum fell 0.4 percent to $937.38, dropping to their lowest level in three months. Palladium fell 2.19 percent to $1,317.78.
