Gold prices edged lower on Thursday, reaching their lowest level in around a month as the dollar firmed amid expectations of more U.S. interest rate hikes this year. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. The move higher in the yields also came amid news that U.S. Senate leaders reached a two-year budget deal to raise government spending by almost $300 billion. Meanwhile, focus remained on U.S. stocks, which were the source of the latest turbulence in global markets. Unless the market plunge intensifies and damages the economy, the Federal Reserve is unlikely to budge from its plan to raise borrowing costs three times this year, some analysts said.
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