Gold prices fell more than 1% to their lowest in 3-1/2 months on Monday as elevated bond yields and a firmer U.S. dollar dampened bullion demand, even as riskier assets dropped after grim China economic data.
A stronger dollar makes gold expensive for overseas buyers, while higher Treasury yields raise the opportunity cost of holding zero-yield bullion.
Spot gold was down 0.7% at $1,798.80 per ounce as of 0920 GMT, after hitting its lowest since Jan. 31 at $1,786.60 earlier in the session. U.S. gold futures fell 0.6% to $1,798.
"Spot gold may not stray far from $1,800, suppressed by the might of King Dollar and elevated Treasury yields, while supported by the looming prospects of a recession," said Han Tan, chief market analyst at Exinity.
Gold prices are down over 13% since scaling a near-record peak of $2,069.89 an ounce in March as the U.S. dollar and Treasury yields were bolstered by aggressive rate hike bets.
"Having now fallen through the psychologically important threshold of $1,800 an ounce and with the hawkish monetary policy more likely to strengthen than weaken, it is hard to see where gold can now find a short-term foothold," Rupert Rowling, market analyst at Kinesis Money, said in a note.
The U.S. dollar consolidated gains near a two-decade peak while equities, oil prices and riskier currencies took a hit after an unexpectedly weak economic data from China highlighted fears about a slowdown in growth.
Silver has found itself caught up in the broader sell-off in equities and gold, being punished for being an industrial metal at a time when growth forecasts are being trimmed and for its lack of yield at a time of rising interest rates, Rowling added.
Spot silver gained 0.2% to $21.11 per ounce, after slumping to its lowest since July 2020 in the last session.
Platinum fell 0.4% to $935.18 and palladium rose 0.9% to $1,960.58.