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A gold sponge is being molten to be converted into bars and bullions at a gold and silver refinery operated by MMTC-PAMP in Nuh, India on August. 31 2022. Picture: ANINDITO MUKHERJEE/BLOOMBERG
Gold prices slipped to a two-week low on Thursday, as a stronger US dollar and expectations of big interest rate hikes from the Federal Reserve diminished the metal’s appeal.
Spot gold was down 0.3% at $1,691.63/oz, as of 3.12am GMT, after touching its lowest level since September 1 at $1,689.78 earlier in the session. US gold futures fell 0.4% to $1,702.40.
“The Fed needs to shock the economic system hard and the chance of a 100-basis-point rate rise is a very real possibility,” said Michael Langford, director at corporate advisory firm AirGuide.
The dollar index edged higher towards recent peaks, 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 US 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 US interest rates as they increase the opportunity cost of holding the non-yielding bullion while boosting the dollar.
Meanwhile, IMF chief Kristalina Georgieva said on Wednesday central bankers must be persistent in fighting broad-based inflation.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.24% to 960.56 tonnes on Wednesday from 962.88 tonnes on Tuesday.
“Outflows from gold-backed exchange traded funds suggest investors are reluctant to hold the precious metal in the short term,” analysts at ANZ said in a note.
Among other precious metals, spot silver shed 1.1% to $19.48/oz, platinum fell 0.5% to $900.99 and palladium slipped 0.4% to $2,154.42.
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.
Firmer dollar bumps gold to two-week low
Gold prices slipped to a two-week low on Thursday, as a stronger US dollar and expectations of big interest rate hikes from the Federal Reserve diminished the metal’s appeal.
Spot gold was down 0.3% at $1,691.63/oz, as of 3.12am GMT, after touching its lowest level since September 1 at $1,689.78 earlier in the session. US gold futures fell 0.4% to $1,702.40.
“The Fed needs to shock the economic system hard and the chance of a 100-basis-point rate rise is a very real possibility,” said Michael Langford, director at corporate advisory firm AirGuide.
The dollar index edged higher towards recent peaks, 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 US 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 US interest rates as they increase the opportunity cost of holding the non-yielding bullion while boosting the dollar.
Meanwhile, IMF chief Kristalina Georgieva said on Wednesday central bankers must be persistent in fighting broad-based inflation.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.24% to 960.56 tonnes on Wednesday from 962.88 tonnes on Tuesday.
“Outflows from gold-backed exchange traded funds suggest investors are reluctant to hold the precious metal in the short term,” analysts at ANZ said in a note.
Among other precious metals, spot silver shed 1.1% to $19.48/oz, platinum fell 0.5% to $900.99 and palladium slipped 0.4% to $2,154.42.
Reuters
JSE faces mixed Asian markets after Wall Street inches higher
Market data — September 14 2022
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