/2020/06/09/1827299006p.jpg)
GOLD - JAKARTA. Gold prices fell 1% on Thursday as U.S. treasury yields remained elevated, with bullion's safe haven appeal also hit by bets for a faster global economic recovery.
Spot gold fell 0.9% to $1,788.56 per ounce at 1306 GMT, after falling as much as 1% earlier in the session. U.S. gold futures eased 0.6% to $1,786.90 per ounce.
"Rising Treasury yields on a better economic outlook in the second half of the year is putting pressure on the metal," Bank of China International analyst Xiao Fu said.
While gold is often sought as a hedge against inflation, higher bond yields have eroded that status since they increase the opportunity cost of holding bullion.
Goldman Sachs downgraded its 2021 gold price target to $2,000/oz from $2,300/oz, and said the pace of the reflation and Federal Reserve's policy moves will determine whether gold will over- or underperform the forecasts.
Read Also: Oil hovers near 13-month highs as storm hits U.S. output
Gold's dip came despite a weaker dollar and U.S. Federal Reserve Chairman Jerome Powell's reiteration on Wednesday that monetary policy would be unchanged until the economy gets back to full employment.
"Overall, there are conflicting forces, we have the rising yields, but a weaker dollar," Bank of China's Fu said.
Mirroring investor sentiment, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since May 2020 on Wednesday.
"There are chances that once the market prices in all the positive factors driving riskier assets, and they start consolidating, gold might emerge back and hit the $2,000 level again this year," said Sunilkumar Katke, head of currencies and commodities at Axis Securities.
Among other precious metals, silver was little changed at $27.97 an ounce. Platinum fell 0.8%, to $1,258.76.
Palladium was up 0.2% to $2,441.82, having earlier climbed to a more than one-month high of $2,454.05.
Read Also: Japan regions push to end state of emergency as COVID-19 cases fall
