Gold ticks lower on rate hike fears, firm dollar

GOLD prices inched lower on Tuesday (Dec 20), as a firmer dollar and expectations of more rate hikes from the US Federal Reserve dented the non-yielding bullion’s appeal.

Spot gold was down 0.1 per cent at US$1,784.98 per ounce as of 0024 GMT. US gold futures were down 0.2 per cent at US$1,794.70.

The dollar index gained 0.1 per cent, making greenback-priced bullion more expensive to overseas buyers.

Fed chair Jerome Powell said last week the central bank will deliver more interest rate hikes next year to curb inflation. Other major central banks have also highlighted the same.

Although gold is seen as an inflation hedge, higher interest rates raise the opportunity cost of holding bullion.

The European Central Bank will not revise its mid-term price stability goal of 2 per cent as that would undermine credibility, vice-president Luis de Guindos said, adding that it was determined to keep raising interest rates to combat inflation.

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Covid-19 is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai, with illness and absence thinning already light trade and forcing regulators to cancel a weekly meeting vetting public share sales.

Spot silver was flat at US$22.94, platinum rose 0.1 per cent to US$981.00 and palladium slipped 0.2 per cent to US$1,665.26. REUTERS