Gold hits 8-week low on robust dollar, steep rate-hike bets


Article content

Gold prices fell to their lowest level

in eight weeks on Thursday, weighed down by a stronger dollar

Article content

and bets that the U.S. Federal Reserve will deliver an

aggressive rate hike to tame stubbornly high inflation.

Spot gold was down 0.4% at $1,688.49 per ounce, as of

0740 GMT, after touching its lowest since July 21 earlier in the

session. U.S. gold futures fell 0.6% to $1,698.10.

“The Fed needs to shock the economic system hard and the

chance of a 100-basis-point rate rise is a very real

Advertisement 2

Article content

possibility,” said Michael Langford, director at corporate

advisory firm AirGuide.

The dollar index rose 0.2% and was not far from its

two-decade peak scaled last week, as hotter-than-expected

inflation data boosted bets for even more aggressive monetary

policy tightening by the Fed.

Fed funds futures are pricing in a 37% chance that the U.S.

central bank will hike rates by 100 basis points at its policy

meeting next week.

“A 100-basis-point rate rise will see gold break below

$1,680/oz,” Langford said.

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

they increase the opportunity cost of holding the non-yielding

bullion while boosting the dollar.

Meanwhile, International Monetary Fund chief Kristalina

Advertisement 3

Article content

Georgieva said on Wednesday central bankers must be persistent

in fighting broad-based inflation.

“The outlook for gold is bearish … If you look at the

biggest gold fund (SPDR Gold Trust), we have seen liquidation in

ETFs,” said Jigar Trivedi, senior analyst currency and commodity

analyst at Mumbai-based Reliance Securities.

“After $1,680, $1,620 is the next support in gold.”

Among other precious metals, spot silver dropped 1.3%

to $19.44 per ounce, platinum fell 0.1% to $905.16 and

palladium was down 0.8% at $2,141.30.

(Reporting by Eileen Soreng and Arundhati Sarkar in Bengaluru;

Editing by Subhranshu Sahu and Sherry Jacob-Phillips)



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.