Gold retreats as Fed officials hint at big rate hikes


Article content

Gold prices slipped on Thursday, as the

dollar and Treasury yields rebounded after comments from Federal

Reserve officials pointed to aggressive interest rate hikes

despite signs of slowing U.S. inflation.

FUNDAMENTALS

* Spot gold fell 0.2% to $1,788.07 per ounce, as of

0123 GMT, after hitting its highest since July 5 at $1,807.79 on

Wednesday.

* U.S. gold futures dipped 0.5% to $1,805.10.

* U.S. consumer prices did not rise in July due to a sharp

drop in the cost of gasoline, delivering the first notable sign

Advertisement 2

Article content

of relief for Americans who have watched inflation climb over

the past two years.

* However, Minneapolis Fed Bank President Neel Kashkari said

that he continues to believe that the U.S. central bank will

need to raise its policy rate to 3.9% by year-end and to 4.4% by

the end of 2023 to fight inflation.

* Chicago Fed President Charles Evans remained more hawkish

than financial markets, expecting that U.S. rates will top out

at 4% next year.

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

these increase the opportunity cost of holding non-yielding

bullion, while boosting the dollar, in which it is priced.

* The dollar index regained some footing to trade up

0.1% at 105.280 after falling to its lowest since June 29 at

Advertisement 3

Article content

104.630 on Wednesday.

* Benchmark U.S. 10-year Treasury yields also

rebounded to 2.7860%, increasing the opportunity cost of holding

non-interest bearing gold.

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

exchange-traded fund, said its holdings fell 0.17% to 997.42

tonnes on Wednesday from 999.16 tonnes on Tuesday.

* Spot silver eased 0.2% to $20.53 per ounce,

platinum rose 0.2% to $943.31, and palladium

gained 0.2% to $2,244.33.

DATA/EVENTS (GMT, July)

1230 US Initial Jobless Clm Weekly

1230 US PPI Machine Manufacturing July

(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi

Aich)

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.