The Business Times

Gold prices fall 1% as dollar jumps on hawkish Fed

Published Thu, Sep 22, 2022 · 10:03 AM

GOLD prices fell 1 per cent on Thursday (Sep 22), as the dollar rose sharply after the US Federal Reserve increased interest rates by another 75 basis points and flagged more hikes.

Spot gold dropped 1 per cent to US$1,656.97 per ounce, as of 1.14 am GMT. US gold futures fell 0.5 per cent to US$1,667.30.

The dollar index scaled a new 2-decade peak versus major peers, making bullion more expensive for buyers holding other currencies.

Fed chair Jerome Powell vowed on Wednesday that he and his fellow policymakers would “keep at” their battle to beat down inflation, as the US central bank hiked interest rates by 75 basis points for a third straight time and signalled that borrowing costs would keep rising this year.

Even though gold is seen as a hedge against inflation, rate hikes to tame inflation tend to raise the opportunity cost of holding zero-yield bullion.

President Vladimir Putin ordered Russia’s first wartime mobilisation since World War Two on Wednesday, shocking citizens with what Western countries described as an act of desperation in the face of a losing war.

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Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.12 per cent to 952.16 tonnes on Wednesday from 953.32 tonnes on Tuesday.

Spot silver shed 1.7 per cent to US$19.26 per ounce, platinum fell 1.1 per cent to US$897.92 and palladium was down 0.8 per cent at US$2,138.51. REUTERS

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