Investing.com - Gold prices retraced some losses on Thursday after falling to almost 10-month lows as the dollar eased, but the precious metal remained under pressure amid expectations for higher U.S. interest rates.
Gold was trading at $1,169.65 a troy ounce by 10:19 GMT after falling as low as $1,163.5 earlier in the session, the lowest level since February 5.
The precious metal almost 8% in November, the largest monthly decline in three years on a rally in the dollar and Treasury yields and on expectations that the Federal Reserve is on course to hike interest rates this month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 101.33, off Wednesday’s highs of 101.88 and below the almost 14-year high of 102.12 reached last Thursday.
Gold is priced in dollars and becomes less attractive to holders of other currencies when the dollar rises.
The dollar surged on Wednesday after the Organization of the Petroleum Exporting Countries reached an agreement on an oil output cut aimed at reining in global oversupply and shoring up prices.
Expectations for higher oil prices added to U.S. inflation expectations, which have already been boosted by prospects for increased fiscal spending under the Trump administration.
Demand for the dollar was also boosted after upbeat U.S. economic reports lent further credence to the view that the Fed will raise rates in this month.
Investors were looking ahead to U.S. data on manufacturing later in the day and Friday’s nonfarm payrolls report for November.
According to Investing.com's Fed Rate Monitor Tool, 97.8% of traders expect the Fed to raise interest rates at its December meeting.
Higher rates typically support the dollar by making the currency more attractive to yield-seeking investors.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Elsewhere in metals trading, silver futures were at $16.37 a troy ounce, while copper futures traded at $2.626 a pound.
Palladium was at $773.2, levels not seen since June 2015.