Gold hits 1-month low on robust dollar, hawkish Powell
Gold prices fell to a one-month low on
Monday, as U.S. Federal Reserve Chair Jerome Powell’s stance to
continue with aggressive monetary policy to bring down inflation
dented the zero-yielding metal’s appeal and boosted the dollar.
Spot gold was down 0.9% to $1,721.16 per ounce, as of
0738 GMT, after hitting its lowest since July 27 at $1,720.31
earlier in the day. U.S. gold futures dropped 1% to
The dollar index scaled a 20-year high, making
greenback-priced bullion more expensive for overseas buyers.
Gold’s momentum has turned lower and while at some point
there will be safe-haven flows, investors are currently focusing
on interest rates remaining high, said Matt Simpson, a senior
market analyst at City Index.
In a speech kicking off the Jackson Hole central banking
conference in Wyoming on Friday, Powell said the Fed would
continue to raise rates to curb inflation even as it caused pain
for households and businesses.
Markets are now largely pricing in a 75-basis-point rate
hike at the Fed’s September meeting.
European Central Bank policymakers also made the case for a
large rate hike next month even as recession risks loom.
Gold is considered a hedge against economic risks, but
rising interest rates increase the opportunity cost of holding
Once the market digests the fact that interest rates are
likely to remain elevated for some more time, the focus will
turn to economic slowdown caused by the hikes and that is likely
to support gold prices, said Sugandha Sachdeva, vice president
of commodity and currency research at Religare Broking.
“At the moment, the $1,680 mark looks like a sacrosanct
level. We may see prices slipping below that amid the steep
advance in the rival greenback, but we don’t expect prices to
close below that pivot, rather they look primed to witness a
Spot silver hit a one-month low and was last down
1.7% at $18.56 per ounce. Platinum slid 0.9% to $855.89
and palladium was flat at $2,110.43.
(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi
Aich and Subhranshu Sahu)