Gold prices drop on firmer dollar, hawkish Fed talk

GOLD prices slipped on Wednesday (Sep 28), as the dollar resumed climb after Federal Reserve officials reiterated the US central bank’s resolution to maintain an aggressive policy stance to tackle soaring inflation.

Spot gold was down 0.3 per cent at US$1,624.81 per ounce, as of 1.32 am GMT.

US gold futures dipped 0.2 per cent to US$1,632.4.

The dollar index was up 0.3 per cent, edging closer to a 20-year high touched on Monday. Benchmark US 10-year Treasury yields rose to a 12-1/2-year high overnight.

Minneapolis Federal Reserve Bank president Neel Kashkari said on Tuesday US central bankers are united in their determination to do what is needed to bring inflation down, and financial markets understand that.

Meanwhile, Chicago Fed president Charles Evans said the central bank will need to raise interest rates to a range between 4.50 per cent and 4.75 per cent.

Though gold is seen as a hedge against inflation and economic uncertainties, rate hikes have dented the non-yielding bullion’s appeal and pushed the dollar to multi-year highs.

The Fed will hike its key interest rate to a much higher peak than predicted 2 weeks ago and the risks are skewed towards an even higher terminal rate, according to economists polled by Reuters.

New orders for US-manufactured capital goods increased more than expected in August, suggesting that businesses remained keen to invest in equipment despite higher interest rates, which could keep the economy on a moderate growth path.

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Gold firms on dollar pullback, rate-hike jitters cap gains

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.28 per cent to 940.86 tonnes on Tuesday from 943.47 tonnes on Monday.

Spot silver fell 0.9 per cent to US$18.26 per ounce, platinum was down 0.5 per cent at US$844.21 and palladium shed 1.4 per cent to US$2,058.44. REUTERS