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Gold prices fell on Tuesday, pressured by
an elevated dollar, while the prospect of aggressive U.S. rate
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hikes for a longer period also weighed on the non-yielding
bullion’s appeal.
Spot gold was down 0.3% at $1,732.10 per ounce, as of
0736 GMT, having hit a one-month low of $1,719.56 in the
previous session.
U.S. gold futures were also down 0.3% at $1,744.10.
The dollar index hovered near a two-decade peak hit
on Monday.
Gold will continue to be driven by sentiment in the dollar
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in the short term, said Stephen Innes, managing partner at SPI
Asset Management.
At the Jackson Hole central banking conference in Wyoming,
the U.S. Federal Reserve and the European Central Bank struck a
hawkish note, pledging all efforts to tame stubbornly high
inflation even if growth takes a hit.
“Powell’s speech appears to have hit home finally, which
could make any significant upside in gold very challenging.
We’re seeing weakness in gold around $1,730, a break of which
will draw focus to $1,680-1,700, which is the next big support
zone,” said Craig Erlam, senior market analyst at OANDA.
While gold is considered a safe bet during economic
uncertainty, interest rate hikes increase the opportunity cost
of holding bullion.
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Markets are now largely pricing in a 75-basis-point rate
hike at the Fed’s September meeting.
“The market’s in a wait-and-watch mode to see how the
economic data plays out, and if it starts to get bad in the U.S.
I think that’s going to encourage the gold bulls to come back
into the fray again,” Innes added.
Reflecting investor sentiment, holdings in SPDR Gold Trust
, the world’s largest gold-backed exchange-traded fund,
fell 0.4% to 980.61 tonnes on Monday.
Spot silver fell 0.2% to $18.72 per ounce, platinum
dropped 1.2% to $853.63, while palladium inched
0.1% higher to $2,149.53.
(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi
Aich, Uttaresh.V and Sherry Jacob-Phillips)
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