• Spot gold tumbled more than 2% intraday, approaching multi-month lows.
  • A firmer U.S. dollar and rising real yields weighed on non-yielding bullion.
  • Traders eye upcoming U.S. data for clues on the Federal Reserve's next move.

Gold Rout Deepens

Spot gold extended losses to over 2% in intraday trading on Friday, sliding toward levels not seen since early this year as the U.S. dollar strengthened and expectations for higher interest rates dampened demand for the non-yielding metal. The decline accelerated after hawkish comments from a Federal Reserve official reinforced the view that rates will stay higher for longer, according to a dealer at a bullion bank.

“The macro picture is incredibly challenging for gold right now,” said a metals strategist at a European bank, speaking on condition of anonymity. “You've got a resurgent dollar and real yields pushing higher, which is a deadly combination for an asset that offers no carry.”

The dollar index hit a fresh high for the month, making gold priced in the greenback more expensive for overseas buyers, while the 10-year Treasury yield climbed above the key 4.5% level, reducing the appeal of bullion as a store of value.

Data Dependence

Market participants are now focused on next week’s U.S. consumer price index (CPI) report and producer price index (PPI) data, which could shape the Fed’s rate path. A hotter-than-expected print would likely exacerbate gold’s decline, while a softer reading might spark a relief rally. “We're in a data-dependent environment again,” said the dealer. “Until we see clear signs that inflation is on a sustainable downward path, gold will struggle to find a bid.”

Spot gold was last down 2.2% at $2,875.20 an ounce, after hitting a session low of $2,864.10. The metal has now erased most of its gains from earlier in the year, when it briefly touched nearly $3,000. Support is now seen at $2,850, with a break below that level potentially opening the door to a test of $2,800.

Broader Impact

The sell-off rippled across the precious metals complex, with silver sliding 3.5% and platinum falling 1.8%. Mining stocks also took a hit, with the NYSE Arca Gold Bugs Index dropping 4% in afternoon trading. ETF investors have been net sellers of gold bullion over the past week, according to data compiled by Bloomberg.

Some analysts see the pullback as a buying opportunity, noting that central banks remain significant buyers and that geopolitical tensions could support safe-haven demand. “The long-term thesis for gold hasn't changed—sovereign buying, de-dollarization, and hedging against financial instability are all still intact,” said the metals strategist. “But in the short run, the macro tailwind has reversed.”

A spokesperson for the World Gold Council declined to comment on the day’s price action, referring to its regular market commentary.

Correction: A previous version of this article misstated the date of the upcoming CPI release. It is scheduled for Wednesday, not Thursday.