Gold falls slightly on stronger dollar despite lower U.S. yields

On Thursday, gold prices fell about 0.48%, failing to hold the $3,300 mark after reaching a two-week high of $3,345. A strong dollar put pressure on gold as U.S. Treasury yields retreated from session highs and the House of Representatives approved Trump's budget, which will now go to the Senate for approval. Gold/USD traded at $3,289, down 0.83%.

Market sentiment improved slightly but remained fragile following a Moody's downgrade of U.S. government debt. The fiscal package approved so far by the U.S. House of Representatives is expected to increase the debt ceiling by $4 trillion.

The U.S. Dollar Index (DXY), which tracks the greenback's value against a basket of six currencies, has partially recouped its previous weekly losses and is now up 0.18% at 99.86, which is acting as a headwind for the dollar-denominated precious metal.

Still, the outlook for precious metal prices remains positive due to geopolitical conflicts. According to sources cited by Walla, the news agency revealed that Israel is ready to attack Iran's nuclear facilities if the latter's negotiations with the United States fail.

On the data front, the U.S. S&P Global Purchasing Managers' Index (PMI) improved, suggesting the economy remains solid. Earlier, the Labor Department revealed that the number of Americans applying for unemployment benefits fell from the previous reading and was lower than expected.

Precious metals traders are focusing on the release of U.S. housing data and a Federal Reserve speaker on Friday.