Investing.com - Gold prices reversed early gains on Thursday, falling back towards the lowest levels since December as a stronger dollar and rising U.S. government bond yields continued to weigh on demand for bullion.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange were down $3.50 or 0.27% to $1,288.00 a troy ounce by 04:20 AM ET (08:20 AM GMT), off an overnight high of $1,293.70.
The precious metal plumbed a low of $1,285.70 on Wednesday, the weakest level since December 27.
Gold has slumped as expectations of higher U.S. interest rates have pushed up bond yields and the dollar.
Higher Treasury yields can spell weakness for gold which, like other commodities, offers no yield, while a stronger U.S. currency makes dollar denominated gold more expensive for overseas buyers.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was last at 93.21, within close reach of Wednesday’s five month peaks of 93.52. The index is up around 0.93% so far this week.
The yield on 10-year U.S. Treasury notes rose as high as 3.117% overnight, the highest level since 2011. Bond yields move inversely to prices.
Yields have climbing higher since the Federal Reserve said at its May meeting that inflation is moving closer to its 2% target.
The Fed raised rates in March and projected two more rate hikes this year, although many investors see three hikes as possible.
In other metals trading, July silver futures were almost unchanged at $16.37 a troy ounce, while July platinum futures were trading at $889.20, little changed for the day. July copper futures were up 0.24% at $3.078 a pound.