Gold Prices Dip as Dollar and Treasury Yields Rise

Gold prices slipped for the second consecutive session on Thursday as the U.S. dollar and Treasury yields edged higher ahead of key inflation data, which could offer further clarity on the Federal Reserve's interest rate plan.

Spot gold was down 0.4% at $2,330.44 per ounce as of 0311 GMT, after falling 1% on Wednesday. U.S. gold futures fell 0.5% to $2,328.60.

The dollar strengthened 0.5%, making dollar-priced bullion less attractive for other currency holders, while benchmark U.S. 10-year bond yields lingered near multi-week highs hit in the previous session.

Tim Waterer, chief market analyst at KCM Trade, stated that investors are realizing the current high interest rate environment is likely to persist. This has shifted focus to chasing U.S. yields and the dollar, reducing attention on gold.

Bullion has dropped more than $100 since reaching a record high of $2,449.89 on May 20, influenced by hawkish remarks from Fed officials and meeting minutes pointing to a prolonged path to the 2% inflation target. While bullion is considered an inflation hedge, higher rates increase the opportunity cost of holding the non-yielding asset.

Traders are currently pricing in about a 59% chance of a rate cut by November, according to the CME FedWatch Tool. The U.S. core personal consumption expenditures (PCE) data, the Fed's preferred measure for inflation, is due on Friday.

Waterer expects gold to probably hold onto the $2,300 level during today's session given the support levels. However, any upside beat from the core PCE could challenge gold's ability to maintain that level.

In other metals, spot silver fell 1.7% to $31.40, platinum was down 0.3% at $1,032.25, and palladium lost 2.1% to $944.75.