Gold slid more than 3 percent and was on track for its biggest one-day drop in nearly 15 months on Tuesday, reaching its lowest price since Britain's shock vote to leave the European Union in June, as the dollar rallied after upbeat US data. Spot silver prices followed gold down, on track for their biggest one-day tumble since January 2015 and reaching the lowest price since late June.
Forecast-beating US manufacturing data on Monday, combined with Tuesday's comment by Richmond Federal Reserve President Jeffrey Lacker that there was a strong case for raising interest rates, stoked expectations that the Fed will lift rates by year-end and drove the dollar higher. Precious metals prices further extended losses after data showed the European Central Bank (ECB) slowed down its money printing in the last week.
Gold's break of support at $1,300 an ounce, which had arrested the metal's August decline, led to a flurry of selling that took prices to the lowest in more than three months at $1,266.33, a level not seen since June 24 in the immediate aftermath of the UK's Brexit vote. Spot gold was down 3.1 percent at $1,270.31 an ounce by 3:09 pm EDT (1909 GMT), while US gold futures for December delivery settled down 3.3 percent at $1,269.70 per ounce.
Silver was down 5.1 percent at $17.78 an ounce. "(Lacker) started the assault on gold by indicating that the Fed should be much more aggressive in its stance on interest rates," said Phillips Streible, senior commodities broker for RJO Futures in Chicago. Platinum was down 1.9 percent at $984.95 an ounce, after falling to the lowest in more than three months at $979.50. Palladium fell 2 percent at $697.15.