Gold drops to 3-month low in hawkish Fed's shadow

Gold hit a three-month low on Thursday as traders braced for the second day of U.S. Federal Reserve Chair Jerome Powell's testimony, with the possibility of more rate hikes overriding any support from signs of a softer labour market, reports Reuters.
Spot gold was down 0.6 per cent to $1,920.40 per ounce at 9:25 a.m. EDT (1325 GMT), set for its fifth straight daily decline for the first time in four months. US gold futures were down 0.7 per cent to $1,931.40.
Gold briefly pared some losses after data showed U.S. jobless claims held steady at a 20-month high last week in what may be an early indication of a softening labor market in the face of the Fed's aggressive credit tightening, but bullion soon hastened its retreat.
"The Fed and other central banks around the world continuing along their path of fighting inflationary pressures and the expectation that more rate hikes will be needed in the future is really the biggest weight on the gold market at the moment," said David Meger, director of metals trading, High Ridge Futures. Further rate increases are "a pretty good guess" of where the central bank is heading if the economy continues in its current direction, Powell said in remarks on Wednesday to lawmakers.
The dollar rebounded from a more than one-month low hit earlier, while Treasury yields were near session highs.
Silver fell 0.7 per cent to $22.49 per ounce while platinum was down 0.4 per cent to $937.38, with both hitting three-month lows.
Palladium shed 2.19 per cent to $1,317.78.