Gold prices set for monthly loss as US rate-hike bets dent appeal

GOLD prices dipped on Tuesday (Feb 28) and were poised for a monthly decline of about 6 per cent as the prospects of further interest rate hikes from the US Federal Reserve continued to weigh on the zero-yielding asset’s appeal.

Spot gold was down 0.1 per cent at US$1,816.33 per ounce, as of 0052 GMT, after hitting a two-month low on Monday. US gold futures were flat at US$1,824.70.

New orders for key US-manufactured capital goods increased by the most in five months in January while shipments of core goods rebounded, suggesting that business spending on equipment picked up at the start of the first quarter, according to data on Monday.

Separate data on Monday showed contracts to buy US previously owned homes rose by the most in more than 2-1/2 years in January.

Money markets expect the US Fed’s target rate to peak at 5.405 per cent in September, from a current range of 4.50 per cent to 4.75 per cent.

Bullion is often seen as a hedge against inflation, but the opportunity cost of holding it rises when interest rates are increased to bring down inflation.

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China’s net gold imports via Hong Kong in January fell by about 47 per cent from the previous month, Hong Kong Census and Statistics Department data showed on Monday.

The dollar index was off a seven-week high hit on Monday, making bullion less expensive for buyers holding other currencies.

Spot silver was flat at US$20.62 per ounce, platinum fell 0.3 per cent to US$936.15 and palladium lost 0.7 per cent to US$1,419.89. REUTERS