Gold drops to 3-week low on U.S. dollar strength, rate-hike fears


Article content

Gold prices slipped to a three-week low

on Friday and were heading for their first weekly decline in

five, as a stronger dollar and prospects of more rate hikes by

the U.S. Federal Reserve dented bullion’s appeal.

FUNDAMENTALS

* Spot gold was down 0.2% at $1,755.89 per ounce, as

of 0107 GMT, after falling to its lowest since July 29 at

$1,753.68 in early Asian trading. For the week so far, the metal

is down 2.5%.

* U.S. gold futures eased 0.1% to $1,769.20.

* The dollar surged to a one-month high against its

Advertisement 2

Article content

rivals, making gold more expensive for buyers holding other

currencies.

* The Fed needs to keep raising borrowing costs to bring

high inflation under control, a string of U.S. central bank

officials said on Thursday, even as they debated how fast and

how high to lift them.

* St. Louis Fed President James Bullard said he is currently

leaning toward supporting a third straight 75-basis-point

interest rate hike in September.

* San Francisco Fed President Mary Daly said hiking rates by

50 or 75 basis points at the Fed’s next policy meeting on Sept.

20-21 would be a “reasonable.”

* Gold is highly sensitive to rising U.S. interest rates, as

these increase the opportunity cost of holding non-yielding

bullion.

* Meanwhile, benchmark U.S. 10-year Treasury yields

Advertisement 3

Article content

were hovering close to a one-month high hit earlier

this week.

* In their July meeting minutes released on Wednesday, Fed

officials said the pace of future rate hikes would depend on

incoming economic data, as well as assessments of how the

economy was adapting to the higher rates already approved.

* Data on Thursday showed the number of Americans filing new

claims for unemployment benefits fell last week.

* SPDR Gold Trust , the world’s largest gold-backed

exchange-traded fund, said its holdings fell 0.32% to 985.83

tonnes on Thursday.

* Spot silver fell 0.4% to $19.44 per ounce, platinum

eased 0.3% to $908.50, and palladium slipped 0.5%

to $2,143.66.

DATA/EVENTS (GMT)

0600 UK Retail Sales MM, YY

0600 UK Retail Sales Ex-Fuel MM

(Reporting by Brijesh Patel in Bengaluru)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



Source link

Comments are closed.