Gold prices fell on Thursday as recent economic data tempered expectations for an aggressive U.S. rate cut in November, while investors turned their attention to upcoming payrolls data.
Spot gold fell 0.5 percent to $2,644.55 an ounce by 0852 GMT, after hitting a record high of $2,685.42 last week.
U.S. gold futures lost 0.2 percent to $2,664.70.
Data on Wednesday showed U.S. private payrolls rose more than expected in September, evidence that labor market conditions were not deteriorating.
Richmond Federal Reserve President Thomas Barkin said the fight to return inflation to the U.S. central bank’s 2 percent target may take longer than expected and limit how far rates can be cut.
Bets on the Federal Reserve cutting rates by 50 basis points in November fell to 34 percent from 49 percent last week, according to the CME FedWatch tool.
“While there was some safe haven buying following the announcement of the Iranian attack, the possibility that rate cuts are not as aggressive as expected likely capped gains and will continue to do so,” said Zain Vawda, market analyst at MarketPulse of OANDA. .
Israel bombed Beirut earlier in the day, after its forces suffered their deadliest day on the Lebanese front in a year of clashes with Iran-backed Hezbollah. The attack comes a day after Iran fired more than 180 ballistic missiles at Israel.
Bullion, which does not generate yields, is a preferred investment in a low interest rate environment as well as in times of geopolitical upheaval.
The market’s focus is on the US nonfarm payrolls report due out on Friday.
“Weak data or rising unemployment could extend the upper end of gold’s range towards $2,700. It will all depend on how weak the data is and its impact on rate cut expectations,” Vawda said.
Spot silver fell 1.2 percent to $31.49, platinum fell 1.3 percent to $989.10 and palladium fell 2 percent to $995.00.
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