Gold prices fell 1 percent on Thursday and broke below their recent trading range around $1,190-$1,210 an ounce after the US dollar surged, making bullion more expensive for buyers using other currencies. The greenback was on track for its biggest one-day gain in over a month after data underlined the strength of the US economy and Italian political turmoil weakened the euro.
Spot gold declined 0.8 percent to $1,184.54 an ounce by 1:36 p.m. EDT (1736 GMT) after hitting its lowest since August 24 at $1,186.78. It was nearing August's 19-month low of $1,159.96. US gold futures for December delivery settled down $11.70 per ounce, or 1 percent, at $1,187.40.
The data came a day after the US Federal Reserve raised interest rates and said it planned four more increases by the end of 2019 and another in 2020. US rate rises tend to boost the dollar and hurt gold prices. They also push US bond yields higher, reducing the attraction of non-yielding bullion.
"The data confirms that the US economy is not about to fall off a cliff and that adds credence to the point that interest rates have to go higher," Saxo Bank analyst Ole Hansen said. "With stock markets trading up and the dollar trading up, there's no room for gold."
Gold is down more than 13 percent from an April high, largely because of the stronger dollar, which has been boosted by a vibrant US economy and fears of a global trade war. Investors have bought the greenback instead of gold as a safe investment. Investors have largely priced in rate rises, and speculators who have built the largest net short position on record in Comex gold have little room to drive gold further down by expanding bets on lower prices, Menke said.
Palladium increased 1.1 percent to $1,078.60 an ounce after touching an eight-month high of $1,084.10. The metal trended higher with industrial demand, that rose on a strong US economic outlook, said Chris Gaffney, president of world markets at TIAA Bank. Silver fell 0.2 percent to $14.26 an ounce and platinum declined 1.2 percent at $811.
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