Gold falls to over one-week low on firm dollar, Fed rate hike bets
GLD•GLD•GLD•GLD•Gold fell 0.2% to $3,981.49 an ounce, after hitting its lowest level since November 4, as a stronger dollar and increased expectations of a Federal Reserve rate hike weighed on prices.
Spot gold fell 0.2% to $3,981.49 per ounce by 0310 GMT on Thursday, after touching its lowest level since November 4. December U.S. gold futures dropped 0.3% to $3,987.50. The dollar climbed to a 19-month high after stronger-than-expected U.S. inflation data and hawkish remarks from Fed officials bolstered expectations of a rate hike next month.
A half-percentage-point rate hike next month became more likely after October inflation accelerated more than expected. Higher rates can reduce gold’s appeal by increasing the opportunity cost of holding the non-yielding metal. Market participants are awaiting Friday’s U.S. Producer Price Index report; OCBC analysts said near-term risks remain two-way and they were not turning bearish on gold’s medium-term prospects.
