Gold slips on higher dollar, Treasury yields; US PCE data in focus

Gold prices fell on Wednesday as a stronger dollar, higher bond yields and hawkish comments from a Federal Reserve official weighed on market sentiment as it braced for the release of US inflation data.

Spot gold fell about 0.8% to USD 2,342.80 per ounce by 1348 p.m. ET (1748 GMT). US gold futures GCcv1 settled about 0.6% lower to USD 2341.20.

“We got a small recovery going in the dollar index. Also, the Fed speakers have recently been quite hawkish. The treasury yields are continuing to rise. So just a lot of these headwinds weighing on the market,” said Phillip Streible, chief market strategist at Blue Line Futures.

The dollar rose 0.4% against its rivals, making gold more expensive for other currency holders, while the benchmark US 10-year Treasury yields climbed to a near one-month peak.

Minneapolis Fed Bank President Neel Kashkari said on Tuesday the US central bank should wait for significant progress on inflation before cutting interest rates.

Traders are looking out for the US core personal consumption expenditures (PCE) price index report — the Fed’s preferred measure of inflation — due on Friday to get more cues on the timing and scale of rate cuts.

US consumer confidence unexpectedly improved in May after deteriorating for three consecutive months amid optimism about the labor market, a survey showed on Tuesday.

“Higher-than-expected PCE data, which raises the prospects of higher-for-longer US rates, may force spot gold to retest the psychological USD 2,300 number for support,” said Han Tan, chief market analyst at Exinity Group.

Silver edged up about 0.2% to USD 32.16 per ounce after hitting an 11-year high last week.

“Silver’s dual role as a precious and industrial metal means it has also benefited from the current environment of reasonably strong economic growth and high inflation,” said Frank Watson, market analyst at Kinesis Money.

Platinum dipped over 2% to USD 1,040.75 per ounce, and palladium fell about 0.9% to USD 964.67.

(Reporting by Brijesh Patel, Daksh Grover, Ashitha Shivaprasad and Rahul Paswan in Bengaluru; Editing by Shailesh Kuber and Ravi Prakash Kumar)