Gold prices retreat as dollar steadies, focus stays on US Fed rate hikes

By Arundhati Sarkar

(Reuters) - Gold prices fell on Thursday as the dollar steadied while investors gauged economic cues from the United States for the pace of future interest rate hikes.

Spot gold fell 0.4% to $1,766.00 per ounce by 0931 GMT. U.S. gold futures edged 0.4% lower to $1,768.50.

"Gold appears to have run out of steam as the recent decline in the U.S. dollar starts to find a bit of a base," said Michael Hewson, chief markets analyst at CMC Markets, adding gold could slide back towards $1,730 before its next leg higher.

But gold could drift higher into year-end if the dollar remains weak overall and yields continue to drift lower, Hewson added.

The dollar index edged up 0.1%, making gold more expensive for other currency holders, while benchmark U.S. 10-year Treasury yields were below the 4% threshold.

Eroding some of gold's recent advance, data showed U.S. retail sales increased more than expected in October, renewing expectations that the improved economic data could prompt the Federal Reserve to keep hiking rates.

San Francisco Fed President Mary Daly told CNBC it's reasonable for the Fed to raise its policy rate to a 4.75%-5.25% range by early next year, and that pausing rate hikes is not part of the discussion.

Rising interest rates tend to dull bullion's appeal as it pays no interest.

"Gold has had an excellent run, but having struggled to push above $1,790, it has succumbed to the strength of an oversold U.S. dollar and seemingly entered a retracement," said City Index analyst Matt Simpson.

Gold hit a three-month peak of $1,786.35 per ounce on Tuesday on fears of escalation of the Ukraine crisis, but prices eased as tensions ebbed.

Elsewhere, spot silver fell 1.8% to $21.08 per ounce, platinum eased 0.5% to $1,001.00, and palladium dropped 1.43% to $2,042.13.

 

(Reporting by Arundhati Sarkar and Brijesh Patel in Bengaluru; Editing by Emelia Sithole-Matarise)