Gold prices slid on Thursday, under pressure from a stronger dollar as a prominent U.S. Federal Reserve official reaffirmed the central bank`s intention to raise interest rates and punitive trade tariffs between the United States and China kicked in.
Bullion failed to confirm its brief break on Wednesday through $1,200 an ounce, a key psychological level, as the dollar resumed its ascent a day later.
"With the dollar stronger again, gold is sliding today," said Chris Gaffney, president of world markets at TIAA Bank.
U.S. gold futures
The Fed`s latest policy meeting minutes suggested it is on course to raise interest rates further after two hikes this year, denting demand for non-interest-yielding gold.
Meanwhile, trade tariffs imposed by the United States and China on each other kicked in on Thursday, benefiting the safe-haven U.S. currency.
Amid shocks to the global financial system caused by the trade war, investors have opted for the safety of U.S. Treasuries and the U.S. currency, making dollar-denominated gold more expensive for holders of other currencies.
Trade tariffs could add to inflation possibilities, Gaffney said.
"Everything is pointing towards inflation returning in the market. When or if companies start to raise prices is still unknown," he added.
The number of Americans filing for unemployment benefits fell last week but sales of new single-family homes unexpectedly declined in July.
Markets are awaiting Fed Chairman Jerome Powell`s comments on Friday at the central bank`s annual meeting in Jackson Hole, Wyoming for any change in its interest rate stance, especially after U.S. President Donald Trump`s attack on its monetary policy this week. Kansas City Federal Reserve Bank President Esther George said on Thursday that the Fed will move ahead with rate hikes.
Signalling further negative sentiment in gold was a record of net shorts in COMEX gold contracts.
First resistance is seen at the overnight high of $1,203.40 and then at this week`s high of $1,208.40. First support is seen at this week`s low of $1,189.60 and then at $1,180.00, Kitco Metals said in a note.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)