Gold prices fell on Tuesday, retreating further from last week’s three-and-a-half month highs as the dollar strengthened against the euro and as investors continued to bet on further rate hikes by the Federal Reserve this year.
Comex gold futures were trading at $1,314.90 a troy ounce by 04:04 AM ET (09:04 AM GMT), down around $5.50 or 0.4% from their last close.
The euro fell to more than one-week lows against the dollar as investors took profits after its recent rally amid concerns that the European Central Bank may attempt to talk down the strengthening currency ahead of its monetary policy meeting later this month.
After getting off to a strong start to the year the single currency had hit a four-month high on Thursday, putting it within striking distance of a September peak of 1.2092, its strongest level since early 2015.
The weaker euro helped support the dollar. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.17% to 92.24.
Demand for the dollar was also underpinned by expectations for further interest rates hikes by the Fed this year after Friday’s U.S. jobs report did little to alter the outlook for monetary tightening.
While the rate of jobs growth cooled in December a pick-up in wage growth pointed to strength in the labor market.
Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Recent weakness in the dollar had supported gold prices by making the dollar-denominated metal cheaper for holders of other currencies. Last week, gold registered a fourth consecutive weekly gain for the first time since April.
Elsewhere in metals trading, silver was down 0.43% at $17.07 a troy ounce, while platinum fell 0.95% to trade at $967.10 a troy ounce.
Palladium was up 0.37% to $1,099. a troy ounce, not far from Thursday’s record high of $1,101.30.
Palladium posted the strongest increase among precious metals in 2017, advancing 57% amid concerns over the supply outlook.
Copper added 0.68% to trade at $3.246 a pound.
