Gold slid nearly 3% on Thursday and silver lost over 5% as strong U.S. retail sales data boosted the dollar and gave ammunition to bets that the Federal Reserve may hasten its tapering.
Fundamentals
Spot gold slid 2.1% to $1,755.75 per ounce by 13:52 p.m. EDT, after hitting an over one-month low of $1,744.30. U.S. gold futures settled down 2.1% at $1,756.70.
Caught in gold's slipstream, silver was last down 4.3% at $22.79.
Hammering gold's appeal to holders of other currencies, the dollar jumped after data showed an unexpected increase in U.S. retail sales in August.
"Gold has taken a pretty big hit," with the upside in the dollar and Treasury yields and the stronger data, "you have longs running for the exit," said Bob Haberkorn, senior market strategist at RJO Futures.
Unless there is some geopolitical event or a Fed surprise, gold's trajectory is unlikely to change going into the FOMC meeting, Haberkorn added.
Gold also found little respite from labour market sluggishness, with initial jobless claims coming slightly higher than expected last week.
The strong retail sales figures show "consumer sentiment is starting to come back, a good indicator for the Fed to bring in those expectations on the next rate hike," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
Focus now turns to the Fed's Sept. 21-22 meeting.
"There are a lot of members in the FOMC in favour of commencing tapering this year, and therefore the outlook for gold is not positive," said Quantitative Commodity Research analyst Peter Fertig.
Unwinding of economic support measures not only dim gold's status as a safe haven -- burnished by the pandemic -- but a subsequent hike in interest rates translates to the increased opportunity cost of holding non-yielding assets like bullion.
Platinum fell 1.7% to $930.52 per ounce, while palladium was the sole gainer, rising 1.5% to $2,032.50.