Gold was down $1.50 at $1324 an ounce, having crept lower in five of the past six sessions. The retreated to a seven-week low of C$1.3236 earlier on Thursday before reversing course to end the day modestly higher.
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Asian stocks firmed on Thursday after weak U.S. data reduced the already low chance of an interest rate increase by the Federal Reserve at next week’s meeting, sending the Treasury yield curve surging to its steepest level in 2-1/2 months.
Gold is highly sensitive to rising interest rates, which would lift the opportunity cost of holding non-yielding assets.
United States retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods, pointing to cooling domestic demand.
“I think the market has somewhat priced in a (rate) cut as well as a tweak to the QE programme”, said Sim Moh Siong, FX strategist for Bank of Singapore.
“The US CPI data was positive for the dollar and this has pushed the gold price lower”, said ThinkMarkets analyst Naeem Aslam.
“It was an unpleasant surprise to people who were bullish”, Tai Wong, head of base and precious metals trading at BMO Capital Markets, told the Journal. “The market is mostly going to be short ahead of the Bank of Japan’s (BOJ) meeting next week. If the BOJ is going for more easing then it might put pressure on gold in line with a strong USA dollar”. And the bank has set a loose inflation target at 2%. Sterling initially declined against the dollar on Thursday, after the Bank of England left interest rates at their record lows and indicated that it would cut them further later this year but reversed course after weak USA retail sales data boosted Sterling. Holidays in many Asian countries including China are expected to keep volumes subdued in the precious complex.
The benchmark Top-40 index fell 0.62 percent to 45,430 while the wider All-share index shed 0.65 percent to 51,833, a level last seen on 11 July according to Reuters data. Sterling initially fell to as low as $1.3174 but recovered most of the lost ground after mixed U.S. economic data.
The dollar was down 0.1 per cent at ¥101.935 (RM4.13) after losing 0.3 per cent overnight.
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Platinum was 1.7% lower at $1,013.20 after falling to two-and-a-half-month lows earlier at $1,005.
