Gold slips as dollar resumes rally, bond yields rise

Fed fund futures are now pricing in a 73% chance of a 75-basis-point rate hike by the Fed at its Sept. 20-21 policy meeting.

"There's few forces pressuring the market, all of which have to do with the outlook for monetary policy across the world over the next year," said Daniel Ghali, commodity strategist at TD Securities.

The dollar jumped to a two decade high after data showed U.S. services industry picked up again in August, making gold more expensive for overseas buyers. [USD/]

Benchmark U.S. Treasury yields rose to their highest levels since June on expectations that the Federal Reserve will keep hiking interest rates. Higher yields raise the opportunity cost of holding non-yielding gold. [US/]

"Gold has been dragged lower by the dollar and rising bond yields. In this environment with those two outside markets doing what they're doing, it's pretty hard for gold to sustain any kind of rally," said Bob Haberkorn, senior market strategist at RJO Futures.

"We could see some bargain hunting that comes in here at these levels. That should keep a floor on this market. However, don't see that substantial upside move here that's sometimes people are looking for in times of uncertainty."

Spot silver slipped 0.2% to $18.12 per ounce, platinum rose 0.9% to $853.46, while palladium fell 0.7% to $2,018.37.