Gold edges down on rate-hike bets, firmer dollar

GOLD prices inched lower on Monday, as a firmer US dollar and prospects of one more rate hike by the Federal Reserve after last week’s mixed economic data dented the metal’s appeal.

Spot gold was down 0.2 per cent at US$1,999.12 per ounce, as of 0121 GMT. US gold futures fell 0.3 per cent to US$2,009.00.

The dollar index was 0.2 per cent higher, making bullion expensive for buyers holding other currencies.

Data released on Friday showed US core retail sales, which correspond most closely with the consumer spending component of gross domestic product, slipped 0.3 per cent last month, but the gains in January and February put consumer spending firmly on track to accelerate in the first quarter.

US consumer sentiment inched up in April but households expected inflation to rise over the next 12 months. A separate report showed production at US factories fell more than expected in March, but eked out a modest gain in the first quarter.

US central bankers “haven’t made much progress” in returning inflation to their 2 per cent target despite a year of aggressive rate increases, and need to move interest rates higher still, Fed Governor Christopher Waller said on Friday.

The CME FedWatch tool now shows markets are pricing in a 80.8 per cent chance of a 25 basis-point hike in May.

Gold is traditionally considered a hedge against inflation, but higher interest rates dim non-yielding bullion’s appeal.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.31 per cent to 927.72 tonnes on Friday from 930.61 tonnes on Thursday.

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Gold edges up on weaker dollar, bets of Fed pause

Spot silver dipped 0.6 per cent to US$25.22 per ounce, platinum fell 0.8 per cent to US$1,036.26 and palladium shed 1.1 per cent to US$1,487.08. REUTERS