Gold extends slide as hawkish Federal Reserve, firm dollar dominate mood

Gold extended losses on Tuesday, hitting a seven-month low as expectations around the Federal Reserve keeping interest rates high boosted the dollar and bond yields, while focus turned to U.S. job openings data due later in the day.

Spot gold was down 0.1% at $1,825.50 per ounce by 0944 GMT, dropping to its lowest since March 9. Bullion was down for a seventh consecutive session.

U.S. gold futures shed 0.3% to $1,841.80.

The dollar climbed to over 10-month peak, while Treasury yields hung near 16-year highs after data on Monday showed U.S. manufacturing took a step further towards recovery in September. [USD/] [US/]

"The next key tests for gold will be the latest U.S. jobs reports ... with solid numbers likely to be the catalyst for a possible break below $1,800 and into negative territory for the year," said Michael Hewson, chief market analyst at CMC Markets.

The U.S. Labor Department's Job Openings and Labor Turnover Survey (JOLTS) report is expected at 1400 GMT. The September non-farm payrolls data is due on Friday.

Fed officials say monetary policy will need to stay restrictive for "some time" to bring inflation back down to the its 2% target, but their unity around that phrase masks an ongoing debate over another possible rate hike this year.

Markets are pricing in a 45% chance of another 25-basis-point rate hike this year, according to the CME FedWatch tool.

Higher rates raise the opportunity cost of holding bullion, which is priced in dollars and does not yield any interest.

"A break below $1800 (per ounce) will be fairly eye-catching for traders. We have seen some buying support emerge there in the past," said Kyle Rodda, financial market analyst at Capital.com.

Spot silver edged 0.3% higher to $21.12 per ounce, after touching a 6-1/2-month low earlier in the session. Platinum also rose 0.3% to $870.33.

Palladium slipped 0.3% to a three-week low of $1,198.48.