Gold slipped on Thursday from a three-month high in the previous session after robust US economic data pointed to a stronger economy, increasing the likelihood that the Federal Reserve will raise US interest rates. The data showing rising US wholesale inventories and an unexpectedly low number of Americans filing for unemployment benefits also pushed up the dollar and US bond yields.
A stronger dollar makes gold more expensive for holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion. Higher interest rates would lift yields further.
Spot gold was down 0.85 percent at $1,231.03 an ounce by 3:53 pm EST (2053 GMT), while US gold futures settled down 0.2 percent at $1,236.80. "If people were betting on the Fed being more relaxed and rates being lower for longer, this (data) has muddied that picture," said Robin Bhar at Societe Generale. Still, Chicago Fed President Charles Evans, a voter on policy this year, told reporters it is reasonable to expect the Fed to raise rates three times this year.
With gold striking $1,244.67, its highest since November 11, on Wednesday, some investors had turned cautious and were cashing in their bets on higher prices, Bhar said. Adding support to prices, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased its bullion holdings for a sixth day on Wednesday.] In other precious metals, platinum was down 0.2 percent at $1,012.99 an ounce. The metal used in jewellery and autocatalysts touched $1,028.50, its highest since October 3, earlier in the session. Spot silver fell by 0.9 percent to $17.62 an ounce, while palladium was up 0.2 percent at $770.