Gold holds losses on firmer dollar amid rate hike views

Gold prices held on to losses from the previous session early on Thursday, after the precious metal fell to four-week lows on a firmer dollar amid expectations of more U.S. interest rate hikes.

Spot gold was down 0.2 percent at $1,315.22 an ounce, as of 0112 GMT. Prices touched their lowest since Jan. 10 at $1,311.66 on Wednesday.

U.S. gold futures were up 0.2 percent at $1,317.40 per ounce.

U.S. stocks finished lower on Wednesday, losing ground late in the session as a jump in Treasury yields kept investor nervousness high.

Wednesday’s lower close in stocks followed another choppy trading session, suggesting that investors are still jittery after the recent steep selloff in equities.

Benchmark Treasury yields rose on Wednesday after the weak demand in the U.S. Treasury Department auction of new 10-year notes and the U.S. Senate reached a budget deal, possibly adding to pressure on stocks.

The Federal Reserve will stick to its plan for “steady, gradual” interest-rate increases, San Francisco Federal Reserve Bank President John Williams said Wednesday despite market gyrations and strong data on U.S. wage growth that has bond traders pricing in faster rising inflation.

However, sluggish price increases in the United States give the Federal Reserve room to hold off on interest rate increases until at least mid-2018, Chicago Federal Reserve President Charles Evans said on Wednesday.

The U.S. dollar rose on Wednesday, marking its biggest one-day gain in more than three months against a basket of currencies. It was steady at 90.289 on Thursday.

Much of the dollar’s advance stemmed from euro’s weakness in the wake of reports that the leader of Germany’s Social Democrats (SPD), Martin Schulz, would not be taking over as finance minister for Europe’s biggest economy.

U.S. congressional leaders reached a two-year budget deal to raise government spending by almost $300 billion, a rare display of bipartisanship that is positive for risk sentiment but is also widening the federal deficit sharply.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.29 percent to 826.90 tonnes on Wednesday from 829.27 tonnes on Tuesday.

A class action suit brought against gold producers in South Africa is likely to be settled “within months” with 9 billion rand ($755 million) going to miners suffering from fatal lung disease, the chair of an industry group said on Wednesday.

Platinum briefly moved into a price premium over palladium on Wednesday for the first time since October. Source: Reuters