Gold Rises After Biggest Loss in Five Months on Hawkish Fed Turn
Shafaq News/ Gold prices hovered near a more than one-month low on Thursday as the dollar and U.S. Treasury yields jumped after Federal Reserve officials projected interest rate hikes sooner than expected.
Following a drop of 2.5% in the previous session to its lowest since May 6 at $1,803.79 per ounce, spot gold was slightly up 0.5% at 1820.34 as of 0504 GMT in early Asian trade.
* U.S. gold futures were down 2.1% at $1,822.00 per ounce.
* The dollar index jumped to its highest level in two months against its rivals, making gold more expensive for holders of other currencies.
* The benchmark 10-year yield rose to its highest level since June 4 at 1.594%, increasing the opportunity cost of holding non-interest bearing gold.
* The Fed on Wednesday began closing the door on its pandemic-driven monetary policy as officials projected an accelerated timetable for interest rate increases, opened talks on how to end crisis-era bond-buying and said the 15-month-old health emergency was no longer a core constraint on U.S. commerce.
* Futures on the federal funds rate, which track short-term interest rate expectations, raised bets that the U.S. central bank will tighten monetary policy in early 2023 after Fed projections showed at least two rate increases that year.
* Higher interest rates will dull gold’s appeal as they translate into a higher opportunity cost of holding it.
* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.1% to 1,045.78 tones on Wednesday.
* Inflation expectations in Britain are well anchored around the Bank of England’s target of 2%, finance minister Rishi Sunak said after data showed inflation broke above the target for the first time in nearly two years.
* Silver gained 0.4% to $27.08 per ounce, palladium eased 1% to $2,769.98, while platinum rose 0.2% to $1,120.77.
Source: Reuters, metals prices updated by Shafaq News Agency