Gold prices near three-week lows

Gold prices held near three-week lows on Thursday after strong US private payrolls data suggested the economy could avoid a recession, fuelling bets of more monetary policy tightening and, in turn, boosting the dollar and Treasury yields.

Spot gold was little changed at $1,936.07 per ounce by 0741 GMT, having hit its lowest since July 11. U.S. gold futures fell 0.2% to $1,971.90.

“This is a buying opportunity, though some further short-term volatility is possible, especially as bond yields are expected to continue to climb,” said Clifford Bennett, chief economist at ACY Securities.

“The easy run for gold is over,” Bennett said, adding that a strengthening dollar is weighing on prices.

The U.S. dollar index (.DXY) rose to a four-week peak and benchmark 10-year Treasury yields were at their highest since November after data on Wednesday showed U.S. private payrolls rose more than expected last month.

On Friday, the U.S. non-farm payrolls report for July will be assessed to see whether the Federal Reserve will need more rate hikes to cool inflation.

The Bank of England, meanwhile, is expected to raise rates to a 15-year high later on Thursday as inflation remains the highest of the world’s major economies.

Non-yielding gold is often sought as a safe investment against inflation and economic uncertainty but tends to lose its sheen when rates rise.

Markets also digested Fitch’s downgrade of the U.S. credit rating, with investors saying they expect long-term unease about the country’s debt position, political polarisation and the global standing of the dollar.

Brian Lan of Singapore dealer GoldSilver Central expects gold to test a support at about $1,933 and, if breached, prices could fall to $1,920.

Spot silver fell 0.7% to $23.58 an ounce and platinum dropped 0.3% to $918.43, both near three-week lows. Palladium slid 0.9% to $1,232.44.