Gold hits over 1-week low as U.S. yields, dollar rise on inflation data

Gold prices fell to their lowest in over a week on Friday, weighed by rising U.S. bond yields and a stronger dollar, as data showing inflation stayed hot last month put the focus back on the Federal Reserve’s policy meeting next week.

Spot gold fell 1.3% to $1,775.76 per ounce by 10:32 a.m. ET (1432 GMT). U.S. gold futures for December delivery slipped 1.3% to $1,778.40 per ounce

“Bond yields are rising and that is putting pressure on gold,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, adding that “there isn’t anything that can stop gold’s decline right now

Yields on the U.S. 10-year notes rose back above 1.6190%, and the dollar jumped 0.4%, after data showed U.S. consumer spending increased solidly in September but was partly flattered by higher prices as inflation remained hot

“Traders across global markets have aggressively raised their outlook for policy tightening, as an energy crunch and snarled supply chains drive inflation higher, leading market participants to price the risk of a faster exit,” analysts at TD Securities said in a note

While gold is considered an inflation hedge, reduced stimulus and interest rate hikes tend to push government bond yields and the dollar up, denting non-yielding gold’s appeal

The Fed is expected to announce when it will start tapering, following its monetary policy meeting on Nov. 2-3

Overall worries about rising prices kept both gold and silver on track for monthly gains of about 1% and 7% respectively

Spot silver fell 1.4% to $23.76 per ounce