Gold flat as firm dollar, US rate hike dent appeal

GOLD prices were flat on Friday (Sep 23) as the US dollar held close to its recent peak, while the likelihood of more aggressive interest rate hikes by the US Federal Reserve also weighed on the appeal for non-yielding bullion.

Spot gold was flat at US$1,671.60 per ounce by 1.07 am GMT. US gold futures ticked 0.1 per cent higher to US$1,682.80.

The dollar index was down 0.1 per cent, but not far from a 20-year peak scaled on Thursday in the wake of a 75-basis-point rate hike by the US central bank and its hawkish outlook.

Rising rates dull bullion’s appeal since it yields no interest. Gold prices have fallen nearly 20 per cent since scaling above the key US$2,000 per ounce mark in March.

Many central banks raised their interest rates this week, following the Fed in the fight against inflation, which has been sending shockwaves through financial markets and the economy.

Eurozone inflation is set to go higher and price growth likely to be more persistent than earlier thought, European Central Bank board member Isabel Schnabel said on Thursday, defending the central bank’s plans to raise rates further.

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The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labour market remains tight despite the Fed’s attempt to cool demand with aggressive rate hikes.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.21 per cent to 950.13 tonnes on Thursday from 952.16 tonnes on Wednesday.

Spot silver was flat at US$19.64 per ounce, platinum rose 0.3 per cent to US$903.22, while palladium dipped 0.2 per cent to US$2,165.10. REUTERS