Economists believe a ‘jumbo-sized’ 100 bps rate hike is on the cards at the US Federals Reserve’s coming September meet
14 September 2022 - 07:15
byEileen Soreng
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Bengaluru — Gold prices were flat on Wednesday, after falling more than 1% in the previous session, as surprisingly stronger US inflation data fuelled expectations that the Federal Reserve will continue hiking interest rates aggressively and bolstered the dollar.
Spot gold was flat at $1,701.70 per ounce as of 3.31am GMT. Prices saw their biggest one-day percentage decline since July 14 on Tuesday. US gold futures were down 0.4% at $1,710.40.
The stronger-than-anticipated numbers have “cemented the likelihood for a jumbo-sized rate hike at the (Fed) meeting that we’re going to see next week,” said DailyFX currency strategist Ilya Spivak. A hawkish Federal Open Market Committee (FOMC) could prompt gold to significantly shift lower, even below the $1,600 figure, Spivak said.
US labor department data showed on Tuesday the headline Consumer Price Index (CPI) edged up 0.1% last month vs expectations for a 0.1% decline, while core inflation surged 0.6%. The data has stoked expectations that the Fed could raise US borrowing costs faster and further than previously expected.
Nomura’s economists said they now believe a 100 basis-point (bps) rate hike is the most likely outcome at the September 20-21 meet.
The dollar index, which measures the currency against six major peers, was steady after recording its biggest one-day percentage gain since March 2020 overnight.
Benchmark US treasury yields hovered close to a near three-month peak touched on Tuesday.
Even though gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding bullion while they boost the dollar, in which the precious metal is priced.
Spot silver dipped 0.2% to $19.28 per ounce and platinum rose 0.5% higher to $880.67. Palladium fell 0.8% to $2,088.36, having fallen 7.1% in the previous session — its biggest one-day percentage drop since June 13.
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 flat on hawkish Fed stance, stronger dollar
Economists believe a ‘jumbo-sized’ 100 bps rate hike is on the cards at the US Federals Reserve’s coming September meet
Bengaluru — Gold prices were flat on Wednesday, after falling more than 1% in the previous session, as surprisingly stronger US inflation data fuelled expectations that the Federal Reserve will continue hiking interest rates aggressively and bolstered the dollar.
Spot gold was flat at $1,701.70 per ounce as of 3.31am GMT. Prices saw their biggest one-day percentage decline since July 14 on Tuesday. US gold futures were down 0.4% at $1,710.40.
The stronger-than-anticipated numbers have “cemented the likelihood for a jumbo-sized rate hike at the (Fed) meeting that we’re going to see next week,” said DailyFX currency strategist Ilya Spivak. A hawkish Federal Open Market Committee (FOMC) could prompt gold to significantly shift lower, even below the $1,600 figure, Spivak said.
US labor department data showed on Tuesday the headline Consumer Price Index (CPI) edged up 0.1% last month vs expectations for a 0.1% decline, while core inflation surged 0.6%. The data has stoked expectations that the Fed could raise US borrowing costs faster and further than previously expected.
Nomura’s economists said they now believe a 100 basis-point (bps) rate hike is the most likely outcome at the September 20-21 meet.
The dollar index, which measures the currency against six major peers, was steady after recording its biggest one-day percentage gain since March 2020 overnight.
Benchmark US treasury yields hovered close to a near three-month peak touched on Tuesday.
Even though gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding bullion while they boost the dollar, in which the precious metal is priced.
Spot silver dipped 0.2% to $19.28 per ounce and platinum rose 0.5% higher to $880.67. Palladium fell 0.8% to $2,088.36, having fallen 7.1% in the previous session — its biggest one-day percentage drop since June 13.
Reuters
Gold dips as wary investors await US inflation data
Gold dips as investors watch for US data
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