Gold slips as dollar firms, focus on US Fed meet next week

GOLD fell on Friday (Jul 21), moving further away from a two-month peak hit in the last session, due to a stronger dollar and as investors remained cautious ahead of the US Federal Reserve policy meeting next week.

Spot gold was down 0.3 per cent at US$1,962.85 per ounce by 01:45pm EDT (1745 GMT), but was set for a 0.4 per cent rise this week. US gold futures settled 0.2 per cent lower at US$1,966.60.

The dollar index rose 0.2 per cent to a more than one-week high after a positive weekly US jobless claims data, making gold more expensive for other currency holders.

“Usually, we will see a softer gold market ahead of the interest rate decision and we’re seeing the metals in a softer environment ahead of that... I think rates are going to be somewhat strong for the foreseeable future,” said Daniel Pavilonis, senior market strategist at RJO Futures.

“Also, gold is having trouble getting above US$2,000 per ounce level and we’re stuck right in the middle of the US$1,900-2,000 range for quite some time here.”

The Fed is widely expected to raise rates by 25 basis points on July 26, and hopes that this increase would be its last had driven gold to its highest in about two months on Thursday.

Rising US interest rates increase the opportunity cost of holding non-yielding bullion.

“If the Fed pours cold water on the notion that its rate hikes are coming to an end, that could prompt bullion to unwind some of its recent gains and falter back into the mid-US$1,900s,” said Exinity chief market analyst Han Tan.

Among other metals, spot silver eased 0.5 per cent at US$24.61 per ounce, after having hit its highest since May 11 in the last session.

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Platinum rose 1 per cent to US$962.78 and palladium gained 1.1 per cent to US$1,291.81. REUTERS