Gold hits six-week trough on stronger dollar, rate hike worries

A gold seller examines golden ornaments before trading at a gold shop in Chinatown, Thailand. Gold prices edged higher on Tuesday after hitting a nearly one-month low in the previous session, helped by a slight pullback in the dollar although lingering worries over further aggressive US interest rate hikes kept gains in check.

Anusak Laowilas | Nurphoto | Getty Images

Gold prices slipped to a more than one-month low on Thursday, as the dollar firmed and prospects of the US Federal Reserve continuing with its aggressive policy tightening stance weighed on the zero-yielding bullion’s appeal.


Spot gold fell 0.2% to $1,706.99 per ounce, as of 0100 GMT, after hitting its lowest level since July 21 at $1,704.94 earlier.

US gold futures shed 0.5% to $1,717.50.

The dollar index was 0.1% higher, while the benchmark US Treasury 10-year yields rose to their highest level since June 28.

The Fed will need to raise interest rates somewhat above 4% by early next year and then hold them there in order to bring too-high inflation back down to the central bank’s goal, Cleveland Federal Reserve Bank President Loretta Mester said on Wednesday.

Even though gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding bullion and boosts the dollar.

Euro zone inflation jumped to another record high and will soon hit double-digit territory, heralding a string of big interest rate hikes even as a painful recession appears increasingly certain.

US private payrolls increased moderately in August, according to the ADP National Employment report.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.3% to 973.37 tons on Wednesday.

Spot silver dropped 0.8% to $17.83 per ounce after falling to a more than two-year low. Platinum fell 0.9% to $838.24 and palladium was 0.6% lower at $2,072.09.


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