Gold inches down on rising odds of Fed rate hike, stronger dollar
GLD•Gold eases as traders price in more Fed tightening
Sept 21 (Reuters) - Gold eased on Monday as markets priced in more monetary policy tightening this year from the US Federal Reserve and hawkish signals from other major central banks that strengthened the dollar.
Spot gold XAU= fell 0.3% to $4,361.96 per ounce by 9:20 a.m. ET (1320 GMT). US gold futures GCcv1 were down 0.6% at $4,400.00.
Stronger dollar and rate-hike expectations pressure bullion
The dollar edged higher against six major peers after gaining more than 1% last week following the Fed's rate hike. A stronger greenback makes bullion more expensive for holders of other currencies.
"We are seeing some lingering concerns among the bulls about tighter US monetary policy, which has pushed the US dollar index to a more than two month-high on Friday. Those bearish elements are working against the precious metals," said Jim Wyckoff, a market analyst at American Gold Exchange.
Traders are now pricing in an 88% chance of a US rate hike in December, according to the CME FedWatch Tool.
Bullion is traditionally considered an inflation hedge, but loses its appeal to yield-bearing assets in a high interest rate environment.
Since the onset of the US-Israeli war on Iran, higher energy prices have stoked inflation concerns, forcing central banks around the world to adopt restrictive policy stances. This, in turn, has pressured gold prices, which are around 17% lower than the session high on February 27.
Minneapolis Federal Reserve President Neel Kashkari said on Sunday that inflation is too high across all sectors of the US economy, not just oil.
Analysts at TD Securities said they anticipate "any near-term weakness in the precious metals market would be contained to only modest Commodity Trading Advisor (CTA) selling, and would increasingly be seen as a buying opportunity for the yellow metal."
