Gold prices briefly slid below the key $1,700 psychological level for the first time in six weeks on Thursday, as major central banks stuck to an aggressive stance to combat inflation, dulling demand for non-yielding bullion.
Spot gold fell 0.7% to $1,699.10 per ounce, having touched its lowest since July. U.S. gold futures shed 0.9% to $1,711.
“The direction of least resistance looks lower just now for precious metals with the strong dollar continuing to weigh on the market,” said independent analyst Ross Norman.
“Expect gold to trade down to test the $1,680 level,” Norman added.
Gold prices have come under pressure as multi-decade high inflation forces central banks around the world to tighten pandemic-era monetary policy. The metal has dropped more than $350 since scaling above the $2,000-per-ounce level in early March, and marked a fifth monthly drop in August, their longest run of monthly losses since 2018.
The dollar also held firm at close to a two-decade peak, heaping pressure on gold by making it expensive for buyers holding other currencies.
Attention now turns to today’s U.S. weekly jobless claims due at 1230 GMT and non-farm payroll report on Friday.
“A strong labour market could pave the way for a more aggressive Federal Reserve, which is bad news for non-yielding gold,” Fiona Cincotta, Senior Financial Markets Analyst at City Index said in a note.