Gold dips on stronger dollar and forecasts of more Fed interest rate hikes
The bullion might be in consolidation for a week or two before resuming the upward march towards $2,000, analyst says
15 August 2022 - 07:39
byBrijesh Patel
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Bengaluru — Gold prices slipped on Monday, weighed down by a rebound in the US dollar and expectations of further interest rate hikes from the Federal Reserve to tame high inflation.
Spot gold was down 0.4% at $1,794.78 per ounce at 5.52am, after rising about 1.6% last week. US gold futures fell 0.3% to $1,810.
The dollar erased earlier losses to gain 0.1% against its rivals, making gold more expensive for buyers holding other currencies.
“Gold looks like in some consolidation here for a week or two before resuming the upward march towards $2,000 yet again. There may be even some who will feel the need to take profits to offset property portfolio weakness,” said Clifford Bennett, chief economist at ACY Securities. “Gold is likely to be supported around $1,785. A slip to $1,760 cannot be ruled out, but this would represent fantastic long-term buying opportunity.”
Meanwhile, Richmond Fed Bank president Thomas Barkin said on Friday he wants to raise interest rates further to bring inflation under control.
Investors will be watching out for minutes from the Fed's last monetary policy meeting due on Wednesday for more clues on future rate hikes. Traders were pricing in about a 44.5% chance of a 75-basis-point rate hike by the Fed in September and a 57.5% chance of 50 bps.
Though gold is seen as a hedge against inflation, rising US interest rates dull non-yielding bullion's appeal.
“Gold recorded its fourth consecutive weekly gain amid easing inflationary pressures. However, those same issues may ultimately be a negative,” ANZ analysts said in a note.
Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.15% to 995.97 tonnes on Friday, their lowest since January.
Elsewhere, spot silver dropped 1% to $20.61 per ounce, platinum fell 0.9% to $953.67, and palladium was steady at $2,223.22.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold dips on stronger dollar and forecasts of more Fed interest rate hikes
The bullion might be in consolidation for a week or two before resuming the upward march towards $2,000, analyst says
Bengaluru — Gold prices slipped on Monday, weighed down by a rebound in the US dollar and expectations of further interest rate hikes from the Federal Reserve to tame high inflation.
Spot gold was down 0.4% at $1,794.78 per ounce at 5.52am, after rising about 1.6% last week. US gold futures fell 0.3% to $1,810.
The dollar erased earlier losses to gain 0.1% against its rivals, making gold more expensive for buyers holding other currencies.
“Gold looks like in some consolidation here for a week or two before resuming the upward march towards $2,000 yet again. There may be even some who will feel the need to take profits to offset property portfolio weakness,” said Clifford Bennett, chief economist at ACY Securities. “Gold is likely to be supported around $1,785. A slip to $1,760 cannot be ruled out, but this would represent fantastic long-term buying opportunity.”
Meanwhile, Richmond Fed Bank president Thomas Barkin said on Friday he wants to raise interest rates further to bring inflation under control.
Investors will be watching out for minutes from the Fed's last monetary policy meeting due on Wednesday for more clues on future rate hikes. Traders were pricing in about a 44.5% chance of a 75-basis-point rate hike by the Fed in September and a 57.5% chance of 50 bps.
Though gold is seen as a hedge against inflation, rising US interest rates dull non-yielding bullion's appeal.
“Gold recorded its fourth consecutive weekly gain amid easing inflationary pressures. However, those same issues may ultimately be a negative,” ANZ analysts said in a note.
Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.15% to 995.97 tonnes on Friday, their lowest since January.
Elsewhere, spot silver dropped 1% to $20.61 per ounce, platinum fell 0.9% to $953.67, and palladium was steady at $2,223.22.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Authorities were warned years ago of security risk at mines
Gold on track for fourth weekly gain
CARTOON: Marikana — an open wound
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.