Yellow metal slides to fresh 2018 low as rise in US borrowing costs lift the dollar

NEW YORK/LONDON — Gold slid more than 1% on Tuesday, falling for a third day to hit its lowest this year as a rise in US borrowing costs pushed up the dollar and overshadowed the impact of strife in Gaza.

Downward momentum in gold picked up after the metal broke below support at its 200- day moving average at $ 1,306 an ounce. That firmly underpinned prices earlier this month.

Spot gold lost 1.6% at $1,290.91 an ounce by 1:35 p.m. EDT (1735 GMT), earlier hitting its lowest since late December at $1,289.40. US gold futures for June delivery settled down $27.90, or 2.12%, at $1,290.30 per ounce.

Israeli troops shot dead dozens of Palestinian protesters on the Gaza border Monday when the high- profile opening of the US embassy to Israel in Jerusalem by the Trump administration raised tension to a boiling point.

But gold investors were fixated on the US dollar, which rose versus a currency basket as 10-year US bond yields shot above 3%, sending borrowing costs higher in a number of other countries.

A Federal Reserve official backed the case for further US interest rate hikes, saying inflation had not yet reached the US central bank’s 2% goal in a sustained way.

Higher US interest rates tend to boost the dollar and bond yields, making greenback- denominated gold more expensive for holders of other currencies and denting the appeal of nonyielding assets such as bullion.

“The market’s been waiting for the next rate hike by the Fed ... and I think gold prices are going to remain under pressure till we get through that hike,” ANZ analyst Daniel Hynes said in a note.

However, if yields were to ease, bullion could recover lost ground over the coming days, Forex.com market analyst Fawad Razaqzada said. “Otherwise the only hope for dollar-denominated gold is a potential correction in the greenback now.”

Silver declined 1.5% at $16.26 an ounce, earlier hitting its lowest in nearly two weeks at $16.18 an ounce.

Platinum lost 1.2% at $893.99 per ounce, falling to a 1-1/2-week low of $892.24 per ounce.

Palladium dropped 1% at $986 an ounce, earlier dipping to a oneweek low of $964. It broke support at its 200-day moving average at $988 an ounce. —