Gold prices fell below the key $2,000 per ounce level on Wednesday as the U.S. dollar rebounded from lows and Treasury yields pared losses, while expectations that the Federal Reserve will pause rate hikes limited the slide in bullion.
Spot gold was down 0.4% at $1,991.16 per ounce by 3:05 p.m. ET (2005 GMT) and set for its biggest daily decline since Nov. 10. U.S. gold futures settled 0.4% lower at $1,991.30.
"The dollar index has rallied to its daily highs and that's limiting some buying interest in gold," said Jim Wyckoff, senior analyst at Kitco Metals, adding that conflicting market forces are making for a steady holiday-type trade.
The dollar index rose 0.3% against its rivals, while Treasury yields pared losses after a strong initial jobless claims data unsettled a market that expects the Federal Reserve to start cutting rates around June as the U.S. economy slows.
Lower interest rates typically boost gold prices as they reduce the opportunity cost of holding non-yielding assets. Bullion scaled a three-week high of $2,007.29 in the previous session.
"The increase in the markets expectations for Fed cutting cycle to commence earlier in 2024 has been the prime force driving gold prices higher over the last week," said Daniel Ghali, commodity strategist at TD Securities.
Fed officials agreed at their last policy meeting that they would proceed "carefully" and only raise interest rates if progress in controlling inflation faltered, minutes of the Oct. 31-Nov. 1 gathering showed.
In other metals, spot silver fell 0.4% to $23.66 per ounce. Platinum fell 1.2% to $923, while palladium slipped 2% to $1,056.91, both eyeing their biggest daily decline since Nov. 10.