By Brijesh Patel
(Reuters) – Gold prices slipped more than 1% on Thursday, weighed down by a stronger dollar and an uptick in bond yields after stronger-than-expected U.S. economic data.
Spot gold dropped 1.3% to $1,945.49 per ounce by 09:45 a.m. EDT (1345 GMT), retreating from a one-week peak hit earlier in the session.
U.S. gold futures fell 1.3% to $1,944.70.
“There was a one and two punch on gold with a better-than-expected initial claims numbers showing that the strength of the U.S. labor market is resilient,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“Then also that surprise upside expectation in GDP data as well shows you that if there is any recession, it’s just not no one seeing it right now. So it paves the way for higher for longer on interest rates.”
Data showed the U.S. economy grew faster than expected in the second quarter as labor market resilience underpinned consumer spending.
A separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 221,000 for the week ended July 22.
Following the data, the dollar index jumped 0.7% against its rivals, making gold more expensive for other currency holders. The benchmark U.S. 10-year yield climbed to 3.90%.
On Wednesday, the U.S. Federal Reserve raised interest rates by 25 basis points as expected. Markets priced in 57% odds of the Fed holding rates for the rest of the year, according to the CME FedWatch tool.
Meanwhile, the European Central Bank (ECB) raised interest rates for the ninth consecutive time on Thursday and kept the door open to further tightening.
Rising interest rates increase the opportunity cost of holding non-yielding bullion.
Spot silver was down 3.2% to $24.13 per ounce, platinum fell 2.5% to $936.95, while palladium dropped 2.3% to $1,2300.
(Reporting by Brijesh Patel in Bengaluru; editing by Jonathan Oatis)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.