Gold subdued by bets for more Fed rate hikes
Gold prices edged lower on Tuesday on
expectations of more interest rate hikes by the U.S. Federal
Reserve, while a softer dollar capped declines.
Spot gold fell 0.2% to $1,733.87 per ounce by 1121
GMT after hitting a one-month low of $1,719.56 on Monday. U.S.
gold futures shed 0.3% to $1,745.20.
“Gold prices remain under the mercy of rising Treasury
yields as markets come to terms with the Fed’s vow to digest to
tame soaring inflation,” said Lukman Otunuga, senior market
analyst at FXTM.
“While a chunk of the downside risk may have been priced in
through the high chances of another jumbo rate hike, gold may be
exposed to further losses if the probability increases,” he
At the Jackson Hole central banking conference in Wyoming
last week, the Fed and the ECB struck a hawkish tone, pledging
all efforts to tame high inflation even if economic growth takes
The Fed has been raising borrowing costs since March, with a
majority of traders now expecting a 75 basis points hike in
Any gain in gold therefore, is likely to be muted as Fed
chief “Jerome Powell’s comments highlighted that plenty of
intervention is still required to bring inflation under
control,” said Rupert Rowling, analyst at Kinesis Money.
Although gold is considered a safe bet during economic
uncertainty, rate hikes increase the opportunity cost of holding
On the data front, investors will scan the U.S. Consumer
Confidence report due later in the day.
If numbers continue to underline the trend that the economy
remains healthy despite high inflation, gold may get a slight
boost, Rowling added.
The dollar index eased from a two-decade peak,
limiting losses in greenback-priced bullion.
Spot silver edged 0.3% lower to $18.7 per ounce,
platinum shed 0.4% to $860.96 and palladium
dropped 0.9% to $2,128.16.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by
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