Meanwhile, treasury yields rose as traders weighed the outlook for growth and inflation, with the US ramping up its vaccine efforts and President Joe Biden getting set to announce spending plans.
Bullion, often sought as a safe store of value in times of economic turmoil, is sensitive to rising yields as they raise the opportunity cost of holding gold, which is non-yielding.
Gold is heading for its first quarterly decline since 2018 as a nascent global recovery reduces the safe-haven’s appeal. In recent weeks, its price has mostly treaded water but faces renewed pressure from a resilient dollar and rising bond rates. A selloff in exchange-traded funds backed by gold is further eroding support.
“We see increasing rates and a stronger dollar from Biden’s spending plans and sped-up vaccine efforts,” TD Securities analyst Ryan McKay told Bloomberg.
“With equities holding pretty steady, it implies this trend can continue without any action from the Fed and that will continue to weigh on gold. We have even seen on days when rates are down gold has struggled to find any upside which really highlights how little buying interest there is at the moment,” McKay added.
After breaking below $1,700, gold’s “support zone at $1,650-$1,670 an ounce will probably be tested,” below which it could fall to $1,600, said ABN Amro Bank NV analyst Georgette Boele.
(With files from Bloomberg)