Gold resumes retreat on dollar strength with all eyes on Fed

GOLD’s slight rebound on Friday from a sharp sell-off in the previous session lost steam as the dollar gained, putting it on course for a second weekly dip with investors focused on the US Federal Reserve’s tapering strategy.

Spot gold was down 0.1% at $1,751.29 per ounce by 1:31 pm EDT (1731 GMT). US gold futures settled 0.3% lower at $1,751.4.

A surprise gain in August US retail sales earlier in the week rekindled early Fed tapering fears, boosting the dollar and driving a nearly 3% drop in gold on Thursday.

The market already believes the Fed will cut back on bond purchases, and that would drive (US Treasury) yields higher, said Daniel Pavilonis, senior market strategist at RJO Futures.

The dollar climbed to a threeweek peak, making gold more expensive for other currency holders, while benchmark Treasury yields also gained.

A strong hawkish shift could prompt another knee-jerk, downward reaction in gold even if it has been priced in already, said StoneX analyst Rhona O’Connell. —