Gold dips as stronger dollar dampens appeal

GOLD prices slipped on Monday (Apr 3) as a sturdy dollar made the greenback-denominated metal less affordable for buyers holding other currencies.

Spot gold was down 0.3 per cent at US$1,962.36 per ounce, as of 0049 GMT. US gold futures also fell 0.3 per cent to US$1,980.10.

The dollar index was 0.3 per cent higher.

Oil prices surged on Monday after Saudi Arabia and other Opec+ oil producers announced a surprise round of output cuts, a potentially ominous sign for global inflation just days after a slowdown in US price data had boosted market optimism.

US consumer spending rose moderately in February, and while inflation cooled, it remained high enough to possibly allow the Federal Reserve to raise interest rates one more time this year.

The opportunity cost of holding non-yielding bullion rises when interest rates are increased to bring down inflation.

Markets see a 48.4 per cent chance of the Fed hiking rates by a quarter point in May, according to the CME FedWatch tool.

Fed Board governor Lisa Cook on Friday said she is watching credit conditions closely and will factor in potential economic headwinds from recent banking sector turmoil as she weighs the right level of rates to deal with high and persistent inflation.

Fed Bank of New York president John Williams said on Friday how financial conditions play out will be a key contributor to his thinking about what’s next for central bank interest rate policy.

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Gold prices dip as dollar firms ahead of US inflation data

Spot silver shed 0.7 per cent to US$23.91 per ounce, platinum dropped 0.5 per cent at US$986.39, while palladium edged up 0.1 per cent to US$1,461.80. REUTERS