Gold prices edged lower on Wednesday, pressured by higher U.S. Treasury yields and a stronger dollar after data suggested the Federal Reserve might slow the pace of rate cuts this year.
Spot gold was down 0.2% at $2,645.64 per ounce, as of 0454 GMT. U.S. gold futures fell 0.3% to $2,658.60.
"The dollar index bounced back on hopes that we may see a bit of a less-volatile monetary policy from the Fed this year so overall there is some weakness in gold prices being displayed," said Kelvin Wong, OANDA's senior market analyst for Asia Pacific.
The dollar strengthened and benchmark 10-year Treasury yield hit an eight-month high after data on Tuesday pointed to a strong economy.
U.S. job openings rose to 8.098 million in November, surpassing forecasts and up from 7.839 million recorded in October.
Markets are currently pricing in the probability of just one Fed cut in 2025, down from two in December, according to the CME FedWatch tool.
The market now awaits U.S. nonfarm payrolls report on Friday for more clues on the Fed's policy path. ADP employment numbers and the minutes from the Fed's December meeting, due later in the day, are also on investors' radar.
"Any softness in the U.S. macro data this week could open the door for gains if investors become more optimistic about the deliverance of interest rate cuts from the Fed in 2025," analysts at KCM Trade said in a note.
High rates reduce the non-yielding asset's appeal.
In addition, China, the world's top consumer of gold, increased its reserves in December for a second consecutive month, according to official data released by the People's Bank of China on Tuesday.
Spot silver steadied at $29.99 per ounce, platinum dropped 0.7% to $944.43 and palladium shed 0.6% to $920.27.
