Gold falls to 10-week low on lofty dollar, imminent U.S. rate hike

div classBodysc17zpet90 cdBBJodivpBy Bharat Gautamp

pReuters – Gold prices fell to a 10week low on Thursday, as an elevated U.S. dollar hurt demand for greenbackpriced bullion, while an impending Federal Reserve interest rate hike also dented the metals appeal as an inflation hedge.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pSpot gold was down 0.5 at 1,877.18 per ounce, as of 0519 GMT, its lowest since Feb. 16. U.S. gold futures slipped 0.6 to 1,877.70.p

pGold has been holding very well above 1,900, but has seen pressure from the dollar, and the underlying factor of the U.S. Federal Reserve being expected to raise interest rates by 50 basis points next week, said Brian Lan, managing director at dealer GoldSilver Central.p

pThe dollar index is at fiveyear highs and a further push above 103.82 would send it to levels not visited since late2002. [USD]p

pA stronger dollar makes greenbackpriced gold less attractive for other currency holders. p

pBenchmark 10year U.S. Treasury yields also firmed as investors awaited further clarity on the “restrictive” policy the Fed plans to pursue next week to combat inflation by curbing economic growth. [US] p

pGold is highly sensitive to rising U.S. shortterm interest rates and higher yields, which increase the opportunity cost of holding nonyielding bullion. However, gold is also seen as a safe store of value during economic and political crises. p

pWith gold prices failing to push higher despite a backdrop of the Ukraine war and rapid inflation, investors have probably decided to look elsewhere, Lan said, adding that lockdowns in China to combat the spread of COVID19 have impacted demand from the top consumer. p

pSpot silver dropped 0.8 to 23.09 per ounce, platinum eased 0.6 to 912.22, while palladium gained 1.5 to 2,234.98.p

pFor gold, in the event of further downside, the next level on watch may be at 1,850, Yeap Jun Rong, a market strategist at IG, said in a note.p

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pp Reporting by Bharat Govind Gautam in Bengaluru Editing by Uttaresh.V, Sherry JacobPhillips and Subhranshu Sahup

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