Gold dips as dollar firms, Fed rate hike looms
GOLD prices slipped on Monday (Jul 25), as an elevated dollar and prospects of an aggressive interest rate hike by the US Federal Reserve this week dented demand for non-yielding bullion.
Spot gold was down 0.2 per cent at US$1,722.84 per ounce, as of 1.10 am GMT, after rising to a more than 1-week high on Friday.
US gold futures fell 0.5 per cent to US$1,718.70 per ounce.
The dollar rose 0.1 per cent against its rivals, making greenback-priced bullion more expensive for buyers holding other currencies.
The US central bank will conclude a 2-day meeting on Wednesday, and markets are pricing in a 75-basis-point rate hike to combat soaring inflation.
Although gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding bullion.
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US Treasury Secretary Janet Yellen said on Sunday that the US economic growth was slowing and she acknowledged the risk of a recession, but she said a downturn was not inevitable.
Last week, the European Central Bank joined its global peers in the fight against soaring inflation as it raised interest rates by 50 bps.
The European Central bank will raise its interest rates until inflation falls back to its 2 per cent target, President Christine Lagarde said in an interview with Germany's Funke Mediengruppe published on Friday.
Spot silver was down 0.6 per cent at US$18.48 per ounce, platinum dipped 0.6 per cent to US$868.62, and palladium slipped 1.5 per cent to US$1,999.94. REUTERS
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