Spot gold fell to $1,260 an ounce by 0343 GMT. It hit its lowest since Dec and having lost nearly 2.8 percent over the last five sessions.
U.S. gold futures for August delivery were down 0.5 percent at $1,267.50 per ounce.
· "Precious metal (gold) is firmly in a downtrend and this is mainly due to the strength in the dollar index which is trading at a significant level," said ThinkMarkets chief market analyst Naeem Aslam.
· The dollar held near an 11-month high against a basket of currencies on Thursday, supported by a rise in U.S. yields, while the pound struggled at its lowest level since November 2017 ahead of Bank of England's monetary policy decision.
A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
The dollar strength follows a remark from Fed Chairman Jerome Powell yesterday and that is driving gold down, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
· Powell on Wednesday said the U.S. jobs market did not appear overly tight and the Federal Reserve should continue with a gradual pace of interest rate rises to balance the bank's employment and inflation goals in a strong economy.
· Meanwhile, a developing trade war between the United States and China is weighing on business confidence and could force central banks to downgrade their outlooks, some of the world's most powerful monetary policymakers said on Wednesday at a meeting in Portugal of central bank heads.
· Gold prices, which can benefit in times of uncertainty, failed to gain so far this week, despite the ongoing trade war.
Spot gold may drop to $1,258 per ounce, as a support at $1,268 does not seem to hold, said Reuters technicals analyst Wang Tao.
In other precious metals, silver fell 0.1 percent to $16.24 an ounce, having earlier revisited its low touched on May 16 at $16.17.
· Platinum slid 0.6 percent to $862.15 an ounce. It touched $854.50, its lowest since Feb. 3, 2016, in the previous session.
· Palladium was 0.2 percent lower at $962.20 per ounce. It hit a one-month low of $960.25 on Wednesday.
· Gold prices broke below the June opening range last week with the decline now eyeing support targets into fresh 2018 lows. Here are the levels that matter for XAU/USD heading into the close of the week.Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
Technical Outlook: In last week’s XAU/USD Technical Outlook, we noted that gold prices had stalled at, “1309 before turning just ahead of slope resistance. The 200-day moving average converges on former swing highs / lows at 1307 and a daily close above this level is needed to keep the focus higher.” Gold closed back below the yearly open at 1302 with prices plummeting nearly 2% the following day.
The decline validates a clear break of the monthly opening range keeps the focus on a late-month low in price. Subsequent support objectives are eyed at the 61.8%retracement of the July advance at 1266 backed by the median-line of the descending pitchfork formation (currently ~1256), 1251 and the 50% retracement of the broader 2016 advance at 1244.
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