By Myra P. Saefong and Rachel Koning Beals
Gold futures settled lower Thursday, pulling back after a three-session climb that lifted prices to their highest level in roughly two years.
The decline came as upbeat U.S. economic data triggered some uncertainty around U.S. interest-rate expectations, ahead of the closely watched monthly employment report due Friday.
August gold GCQ6, -0.41% shed $5, or 0.4%, to settle at $1,362.10 an ounce. Gold futures had climbed over the past three trading session and closed on Wednesday at $1,367.10 an ounce, the best finish since March 2014, according to FactSet data.
Dovish Federal Reserve policy meeting minutes and comments from the central bank that suggested the panel may keep rates lower for longer had supported a recent rise in gold futures. Precious metals tend to draw buying in a low-rate climate. Rising rates make commodities that don’t offer a yield less attractive to investors.
In the wake of the data, the ICE U.S. Dollar Index DXY, +0.23% edged up by 0.3%, adding further pressure to gold, which is priced in the greenback. The metal has largely resumed its inverse relationship to gold, a bond broken in the immediate wake of the U.K. referendum to leave the European Union, when currencies were especially volatile.
Even with Thursday’s pullback for gold, most analysts remain optimistic for gold’s prospects given interest-rate dynamics and post-Brexit economic uncertainty.
Joe Wickwire, manager of the Fidelity Select Gold portfolio and the Fidelity Global Commodity Stock fund, believes there could be more room for gold to rally near-term, now that the Fed may stand pat for longer than previously expected.
“I don’t believe the current trajectory of rate increases is likely to compromise gold’s positive story in the near term,” Wickwire said in a commentary.