London: Gold slipped yesterday 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 0.6 percent at $1,234.36 an ounce by 1619 GMT, while US gold futures dropped 0.3 percent to $1,235.50.
“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. With gold striking $1,244.67, its highest since Nov. 11, on Wednesday, some investors had turned cautious and were cashing in their bets on higher prices, Bhar said.
Federal Reserve Chair Janet Yellen is due to appear before U.S. senators and members of Congress on Jan. 14 and Jan. 15, when she will be quizzed about the U.S. economy.
