Gold falls to more than one-week low on firm dollar, Fed rate hike bets
GLD•Gold fell to a more than one-week low as stronger-than-expected U.S. inflation data and hawkish Federal Reserve remarks boosted the dollar and strengthened expectations of rate hikes. Spot gold was down 0.2% at $3,977.99 an ounce, while December U.S. gold futures fell 0.4% to $3,983.20.
1. Gold prices retreat
Spot gold fell 0.2% to $3,977.99 an ounce by 0506 GMT after touching its lowest level since November 4. December U.S. gold futures dropped 0.4% to $3,983.20.
2. Dollar and rate expectations
The dollar climbed to a 19-month high after U.S. inflation accelerated more than expected in October and Federal Reserve officials signalled willingness to tighten policy more aggressively. Traders were fully pricing in a rate hike next month and another in March; higher interest rates raise the opportunity cost of holding non-yielding gold.
3. Investors await producer prices
Market participants were waiting for Friday’s U.S. Producer Price Index report. OCBC analysts said oil prices, yields and the dollar remained important near-term drivers, while they were not turning bearish on gold’s medium-term prospects.
