Gold resumed its plunge for a fifth straight session on Thursday as the dollar’s rebound dented the appeal of the metal as an alternative investment.
After augmenting 2.5 percent last week, the shiny metal has wiped off 1.97 percent so far this week as the dollar rebounded against major currencies.
The dollar index hit a one-week high of 90.16 as the FOMC minutes for January policy meeting signaled that policymakers were leaning toward a quicker pace of interest rate hikes.
Fed minutes stressed on the progress in the economy and that the majority of members had upgraded their forecasts for the economy since December.
The hawkish stance by the Fed bolstered expectations of seeing an interest rate hike by a quarter point in March’s policy meeting.
Odds of four rate increases this year has surged to nearly 29 percent, according to CME Group’s FedWatch tool, up from previous forecasts of 24 percent.
U.S. 10-year treasury yield slipped 0.43 percent to 2.9372 percent after climbing to a four-year high at 2.957 percent overnight.
As known, the high interest rate environment slashes demand on gold that does not provide any yield to its holders.
While gold should benefit from the rising inflation, it could prompt other central banks to scale back stimulus and reverse their loose monetary policy.
The yellow metal has been under selling pressure since touching a top of
$1361 an ounce on February 16, where it could find some support at $1316.