By Sethuraman N R
(Reuters) - Gold prices fell on Thursday on a strong dollar and a rebound of stocks following a multi-day sell-off globally, taking steam out of bullion's momentum.
Prices had risen to $1,239.22 earlier, near a more than three-month high of $1,239.68 hit on Tuesday as the stock market sell-off spurred interest in gold, considered a safer investment.
U.S. gold futures
"With equities being higher today, gold is unable to sustain a rally," said Bob Haberkorn, senior market strategist at RJO Futures, adding that investors looking for safety are opting for Treasuries instead. [US/]
"Normally you would see gold trading significantly higher with this volatility, concerns in equity markets and global economic slowdown. But the fact that the U.S. Federal Reserve is hawkish, gold is having a hard time sustaining any rallies."
U.S. stocks followed Europe higher on Thursday, a day after Wall Street suffered its worst day since 2011. [MKTS/GLOB]
The government said earlier that the number of Americans receiving unemployment benefits fell to more than a 45-year low, a sign to tight labour market conditions. That will likely keep the U.S. central bank on course to raise interest rates again in December. [nUSNPLEEMN]
Prospects of higher U.S. interest rates are negative for dollar-priced gold as they raise the opportunity cost of holding the bullion.
"The options expiry on Thursday is also dampening volatility in gold as between $1,225 and $1,230. There were about 1.5 million ounces of options that were open, allowing people to play around the range," said Tai Wong, head of precious and base metals trading at BMO.
The dollar index <.DXY>, which measures the greenback against a basket of six other currencies, hit a two-month high, while remarks by European Central Bank President Mario Draghi said the bank would keep policy unchanged, including plans to claw back unprecedented stimulus. [USD/] [nL8N1X522B]
Gold briefly turned positive as the dollar moved lower versus the euro
"It doesn't sound like that he (Draghi) is concerned much about the ongoing issues taking place in Italy. On the outset, traders have taken the message as a more hawkish statement and this pushed the euro-dollar pair higher," Think Markets UK chief markets analyst Naeem Aslam said in a note.
In other precious metals activity, palladium
(Reporting by Swati Verma in Bengaluru; editing by Dan Grebler and Steve Orlofsky)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: Oct 26, 2018 07:05 AM