• Gold falls 1.5% as stronger-than-expected US economic data boosts the dollar and real yields.
  • The precious metal trades near $4,392.57/oz, extending its pullback from earlier highs.
  • Analysts eye further downside if the dollar rally persists, but long-term support from central bank buying remains.

Dollar Strength Weighs on Bullion

Gold prices slumped on Thursday after a batch of US economic releases pointed to a resilient economy, reinforcing expectations that the Federal Reserve will keep interest rates higher for longer. Spot gold was last down 1.5% at $4,392.57 per ounce, according to people familiar with the matter.

“Every time we get strong data, it’s a headwind for gold because it pushes the dollar up and real yields higher,” said one metals trader in New York. The rally in the greenback, which climbed 0.6% against a basket of major currencies, made dollar-denominated bullion more expensive for overseas buyers.

The data, which included better-than-forecast jobless claims and manufacturing figures, came amid growing uncertainty over when the Fed might begin cutting rates. “The market is repricing rate expectations, and that’s hurting gold in the short term,” the trader added.

Key Support Levels in Focus

Gold’s decline brought it closer to the psychologically important $4,300 level, a zone that has acted as support in recent months. A break below could open the door to a test of the $4,200 area, according to technical analysts. However, some investors see the pullback as a buying opportunity, given ongoing central bank purchases and geopolitical tensions.

China and India, the world’s top gold consumers, have continued to add to their reserves, according to recent data from the World Gold Council. “Central bank buying is a structural floor under the market,” said a fund manager in London. “But in the near term, macro factors are king.”

Outlook: Data-Dependent

Traders are now bracing for next week’s consumer price index report, which could further sway expectations for Fed policy. A hotter-than-expected reading might send gold tumbling toward $4,300, while a soft print could fuel a rebound. The metal remains about 8% below its all-time high set earlier this year, as the market digests the shifting macro landscape.

Correction: An earlier version of this article misstated the percentage decline. It is 1.5%, not 1.2%.