Gold falls as US dollar, yields rise on hawkish Fed comments

GOLD slipped on Wednesday (Aug 3) as the dollar and US Treasury yields advanced after hawkish comments from Federal Reserve officials hinted at continuing aggressive interest rate hikes in the near term.

Spot gold was down 0.2 per cent at US$1,757.08 per ounce, as of 1.05 am GMT, after hitting a near 1-month high of US$1,787.79 on Tuesday.

US gold futures dropped 0.9 per cent to US$1,772.80 per ounce.

The dollar was up 0.1 per cent against its rivals after rising 0.8 per cent overnight, making greenback-denominated gold more expensive for other currency holders.

Benchmark US 10-year Treasury yields rallied to 2.7740 per cent, after hitting a 4-month low of 2.5160 on Tuesday.

A trio of Fed officials from across the policy spectrum signalled they and their colleagues remain "completely united" on getting US interest rates up to a level that will more significantly curb economic activity and put a dent in the highest inflation since the 1980s.

St Louis Federal Reserve president James Bullard said if inflation does not respond to the Fed's interest rate increases by easing as expected, then rates will have to remain "higher for longer".

Traders now see a chance of about 44 per cent that the Fed will hike rates by another 75 basis points at its next meeting in September.

Although gold is considered a hedge against inflation, rising US interest rates reduce the appeal of non-yielding bullion.

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SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.3 per cent to 1,002.97 tonnes on Tuesday from 1,005.87 tonnes on Monday.

The Biden administration wants to keep tensions between Washington and Beijing inflamed by a high level visit to Taiwan from boiling over into a conflict, White House national security spokesperson John Kirby said.

Spot silver fell 0.7 per cent to US$19.81 per ounce, platinum was down 0.3 per cent at US$891.32, and palladium eased 0.1 per cent to US$2,061. REUTERS