April 17 (Reuters) – Gold reversed course to slip below the key USD 2,000 level on Monday, pressured by a stronger dollar and higher Treasury yields, while investors looked for cues on whether the market will see a ‘one and done’ rate hike by the US Federal Reserve in May.
Spot gold was down 0.4% at USD 1,995.42 per ounce by 1:40 p.m. EDT (17:40 GMT) after rising as much as 0.6% earlier in the session. US gold futures GCv1 settled 0.4% lower at USD 2,007.
A stronger US dollar and the rise in bond yields, along with some profit-taking from recent gains, are putting pressure on gold, said Jim Wyckoff, senior analyst at Kitco Metals.
US dollar gained 0.6%, making greenback-priced bullion less attractive for overseas buyers, while benchmark Treasury yields climbed to a more than two-week high.
The trend for gold is still up, and “I wouldn’t be surprised to see gold hit a new record high in the coming weeks,” added Wyckoff.
Gold dropped 2% on Friday after the dollar bounced, with Fed officials suggesting the central bank could hike rates by another 25 basis points (bp) next month.
However, economic data last week began to fill in the portrait of a US economy that is losing momentum, intensifying bets that the Fed’s next increase will be its last.
The CME FedWatch tool shows markets are pricing in an 86% chance of a 25-bp hike in May, followed by 2-in-3 chances of a pause in June.
The USD 1,980-USD 2,000 range is a promising support zone for bullion, said Carlo Alberto De Casa, external analyst at Kinesis Money.
Investors will focus on comments from Fed officials this week before they enter into a blackout period from April 22 ahead of the Fed’s May 2-3 meeting.
Spot silver fell 1.4% to USD 24.99 per ounce, platinum was up 0.4% at USD 1,048.36 and palladium gained 3.4% to USD 1,554.85.
(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Shailesh Kuber)