Gold extends fall on stronger dollar, Fed rate-hike worries

GOLD prices inched lower on Tuesday (Aug 16) after falling more than 1 per cent in the previous session, weighed down by an uptick in the US dollar and worries over further US interest rate hikes.

Spot gold was down 0.1 per cent at US$1,777.46 per ounce, as of 12.54 am GMT, after hitting its lowest since Aug 8 at US$1,772.30 on Monday.

US gold futures eased 0.2 per cent to US$1,793.90 per ounce.

The dollar rose 0.1 per cent to a more than 1-week high against its rivals, making gold more expensive for buyers holding other currencies.

US single-family homebuilders’ confidence and New York state factory activity fell in August to their lowest levels since near the start of the Covid-19 pandemic, a further sign the economy is softening as the Federal Reserve raises interest rates.

Fed officials have maintained a hawkish tone and hinted at more rate hikes down the year to tame high inflation.

Although gold is seen as a hedge against inflation, rising US interest rates dull non-yielding bullion’s appeal.

Investors now await minutes from the Fed’s July meeting on Wednesday for clues on further rate hikes.

Traders were pricing in around a 36.5 per cent chance of a 75-basis-point rate hike by the Fed in September and a 63.5 per cent chance of a 50 bps increase.

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Gold steadies near US$1,800/oz on lower dollar, yields

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2 per cent to 993.94 tonnes on Monday from 995.97 tonnes on Friday.

Spot silver slipped 0.2 per cent to US$20.21 per ounce, platinum fell 0.4 per cent to US$929.29, and palladium was steady at US$2,144.52. REUTERS