The Business Times

Gold dips as US dollar firms on Powell’s hawkish tone weigh

Published Mon, Aug 29, 2022 · 09:52 AM

GOLD prices fell on Monday, as the dollar held on to gains following US Federal Reserve Chair Jerome Powell’s signal that the central bank will raise interest rates further to tame sky-high inflation.

Spot gold fell 0.3 per cent to US$1,732.17 per ounce, as of 0107 GMT, after falling 1.2 per cent on Friday. 

US gold futures were down 0.3 per cent at US$1,745.3. 

The dollar index held close to a two-decade high of 109.29 touched last month, making the bullion expensive for those holding other currencies.

Americans are headed for a painful period of slow economic growth and possibly rising joblessness as the Fed raises interest rates to fight high inflation, Powell warned on Friday at the Jackson Hole central banking conference in Wyoming. 

Higher interest rates increase the opportunity cost of holding non-yielding bullion, while boosting the dollar.

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Central banks around the world risk losing public trust and must now act forcefully to combat inflation, even if that drags their economies into a recession, European Central Bank board member Isabel Schnabel said on Saturday at the symposium. 

Gold premiums in top consumer China jumped last week to their highest since October as a fall in global prices encouraged purchases, while demand cooled in India as buyers waited for a bigger price drop.

Speculators cut their net long Comex gold position by 15,910 contracts to 30,326 in the week to Aug 23, data from the US Commodity Futures Trading Commission showed.

Spot silver fell 1 per cent to US$18.69 per ounce, platinum slipped 1 per cent to US$855.27 and palladium was flat at US$2,110.19. REUTERS

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