Gold lingers near 1-month low as prospects of more Fed rate hikes weigh

GOLD languished near a 1-month low on Wednesday (Aug 31) and was set for a fifth consecutive monthly drop, as solid US data and hawkish Federal Reserve comments pointing to higher interest rates dented the non-yielding metal’s appeal.

Spot gold was flat at US$1,723.28 per ounce, as of 1.09 am GMT, trading close to a 1-month trough hit on Monday. It has declined 2.5 per cent so far in the month.

US gold futures fell 0.1 per cent to US$1,734.40.

The influential chief of the New York Fed said on Tuesday the US central bank will likely need to get its policy rate ”somewhat above” 3.5 per cent and keep it there through the end of 2023.

Even though gold is seen as a hedge against inflation, rate hikes raise the opportunity cost of holding bullion.

US job openings increased in July and data for the prior month was revised sharply higher, pointing to persistently strong demand for labour that is giving the Fed cover to maintain its aggressive rate increases.

Data also showed a bigger-than-expected rebound in US consumer confidence in August.

A chorus of European Central Bank policymakers called for decisive and swift rate hikes on Tuesday to combat soaring inflation, ahead of next week’s policy meeting.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.44 per cent to 976.26 tonnes on Tuesday from 980.61 tonnes on Monday.

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Gold edges higher as dollar slips from 20-year high

The dollar index inched 0.1 per cent lower, while benchmark 10-year yields were off 2-month highs hit in the previous session.

Spot silver fell 0.5 per cent to US$18.40 per ounce, platinum rose 0.2 per cent to US$849.11 and palladium dipped 0.3 per cent to US$2,082.18. REUTERS