Gold falls to three-week low on robust dollar, Fed rate-hike fears


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Gold prices slipped to a three-week low

on Friday and were set for their first weekly drop in five, as a

stronger dollar and prospects of more rate hikes by the U.S.

Federal Reserve dented bullion’s appeal.

Spot gold was down 0.2% at $1,753.97 per ounce, as of

0706 GMT, after falling to its lowest since July 28 at $1,751.01

earlier in the session. For the week, bullion was down 2.6%.

U.S. gold futures eased 0.1% to $1,768.90.

“Markets are expecting interest rates to go further up and

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of course the strong dollar is definitely weighing on gold

prices at the moment,” said Brian Lan, managing director at

dealer GoldSilver Central.

“Many are staying on the sidelines expecting gold prices to

go further down. Also, we’ve seen quite a bit of liquidation on

the ETF (exchange-traded fund) side.”

The dollar surged to a one-month high against its

rivals, making gold more expensive for buyers holding other

currencies.

The Fed needs to keep raising borrowing costs to bring high

inflation under control, several U.S. central bank officials

said on Thursday.

St. Louis Fed President James Bullard said he was currently

leaning toward supporting a third straight 75-basis-point rate

hike in September.

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

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they increase the opportunity cost of holding non-yielding

bullion.

In the July meeting minutes released on Wednesday, Fed

officials said the pace of future rate hikes would depend on

incoming economic data.

Data on Thursday showed the number of Americans filing new

claims for unemployment benefits fell last week, suggesting

labor market conditions remain tight.

On the technical front, spot gold may fall to $1,744 per

ounce, as it has broken a support at $1,759, according to

Reuters analyst Wang Tao.

Spot silver fell 0.9% to $19.34 per ounce and was on

track for its biggest weekly percentage fall since late-January.

Platinum fell 0.4% to $906.96 per ounce and palladium

slipped 0.6% to $2,142.47.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu and Vinay Dwivedi)

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