Gold prices retreated on Thursday as the dollar rebounded and some investors locked in profits after the safe-haven metal scaled a nine-month peak on dovish remarks from Federal Reserve Chair Jerome Powell.
Spot gold fell 1.8% to $1,915.66 per ounce by noon ET, after hitting an intraday high of $1,959.52 an ounce earlier. US gold futures had a more moderate decline, down 0.6% at $1,931.50 per ounce in New York.
[Click here for an interactive chart of gold prices]
Concurrent with gold’s decline, the US dollar index jumped nearly 1% against its rivals, making dollar-priced bullion less attractive for overseas buyers.
“While the underlying support to the gold market remains strong, the slight pullback in the market could be due to some profit-taking ahead of tomorrow’s monthly US jobs data,” said David Meger, director of metals trading at High Ridge Futures, in a Reuters note.
The US central bank on Wednesday raised its benchmark borrowing costs by 25 basis points (bps) to a range of 4.5% to 4.75%, the smallest hike so far in an 11-month tightening cycle.
Meanwhile, Fed Chair Powell warned about further monetary policy tightening as inflation remained too high, but noted that the progress on disinflation was in its early stages.
“Powell was not nearly as hawkish as he had been in recent FOMC press conferences and left the door open to a Fed “pivot” sooner rather than later,” said Jim Wyckoff, senior analyst at Kitco Metals.
Market focus now shifts to January’s US nonfarm payrolls report due on Friday.
Data last week showed the number of Americans filing new claims for unemployment benefits dropped to a nine-month low as the labour market remains resilient despite higher borrowing costs.
(With files from Reuters)