Gold buckles under pressure from strong dollar

LONDON, May 16 (Reuters): Gold fell more than 1 per cent to its lowest in 3-1/2 months on Monday as elevated bond yields and overall strength in the 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 0.2 per cent to $1,807.64 per ounce as of 1311 GMT, after earlier hitting its lowest since Jan. 31 at $1,786.60. US gold futures were little changed at $1,808.10.
"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 per cent since scaling a near-record peak of $2,069.89 an ounce in March.
"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 dollar consolidated near a two-decade peak while risk appetite took a hit after weak economic data from China highlighted fears about a slowdown.
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, Rowling added.
Spot silver gained 0.9 per cent to $21.26 per ounce, after slumping to its lowest since July 2020 on Friday.