Gold ticks lower as dollar strength dulls appeal

Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh·Reuters
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By Ashitha Shivaprasad

(Reuters) - Gold prices eased on Thursday under pressure from a firmer dollar although losses were capped by a dip in Treasury yields, while investors looked for more economic cues that could influence rate hikes.

Spot gold fell 0.2% to $1,758.42 per ounce by 2:18 p.m. EDT (1818 GMT), having slipped to $1,759.17 on Wednesday, its lowest since Aug. 3. U.S. gold futures settled down 0.3% at $1,771.2 per ounce.

Investors continued to digest minutes from the U.S. Federal Reserve's July meeting released the previous day. The minutes showed more rate hikes were in the pipeline, but also signalled Fed officials had begun to more explicitly acknowledge the risk they might go too far and curb economic activity.

TD Securities commodity strategist Daniel Ghali said lower U.S. Treasury yields could be driving the marginal uptick in non-interest bearing bullion, with rate hikes largely priced in.

But the Fed could push back against the idea the rate hike cycle may come to an end at the coming Jackson Hole Symposium, as "it is too early to declare victory against inflation," Ghali added.

The dollar hit a three-week high, making gold - which is priced in the currency - more expensive for overseas buyers.

Assuming the Fed will fight inflation without pushing the economy into recession, safe-haven demand will fade further, causing gold to move gradually lower on a medium to longer-term horizon, said Carsten Menke, Head Next Generation Research at Julius Baer.

Meanwhile, U.S. weekly jobless claims dipped as the labor market remained resilient.

The Fed's Mary Daly, meanwhile, said either a half or 75-basis-point interest-rate hike in September would be "reasonable".

In the physical markets, Swiss gold exports to top consumer China in July rose to their highest since December 2016.

Spot silver fell 1.7% to $19.513 per ounce, platinum fell 1.2% to $912.88 and palladium rose 0.4% to $2,150.02.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri, Kirsten Donovan)

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