Gold fell on Friday as the dollar rose after U.S. economic data came in within analysts' expectations, cementing assumptions of an interest rate increase by the Federal Reserve by year-end.
U.S. retail sales rebounded 0.6 percent in September while producer prices also rose broadly to record their biggest year-on-year increase since December 2014.
The dollar gained 0.4 percent against a basket of six major currencies.
Later in the session, Federal Reserve Chair Janet Yellen gave a broad review of where the U.S. economic recovery may still fall short.
"While Yellen did point out some of the longer-term reasons for keeping interest rates lower than in previous cycles, she importantly didn't give any indication that she is opposed to the market interpreting recent Fed communications as signalling a rate hike is imminent this year," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto, adding that the bank still expects a rate hike in December.
Earlier, Boston Fed President Eric Rosengren said that investors were probably right in placing "very high" odds on a U.S. interest rate increase in December.
Markets are pricing in around a 70 percent chance that the Fed will move.
Gold is highly sensitive to increases in U.S. interest rates, which can lift the opportunity cost of holding non-interest-bearing gold.
"We are in the midst of one of those large Fed-related moves - we saw an almost $100 upswing in June and July and we are now seeing a $100 decline in September and October as markets see a Fed rate hike coming in," ING Bank senior strategist Hamza Khan said.
Holdings of the SPDR Gold Trust
Among other precious metals, spot palladium
"Interest by investors to buy palladium has been muted this year; large ETF outflows are evidence of this," said UBS Wealth Management Research in a note.
"However, we expect this trend to reverse in coming months, sparked by greater concerns about a deeper market deficit as industrial activity lifts further and mine supply struggles to respond."
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