Gold drops below $1,700 against stronger dollar, interest rate hike bets

prices fell below the key $1,700 level on Thursday for the first time since July, as a rising and expectations for aggressive interest rate hikes eroded its appeal.

Spot was down 0.8% at $1,696.76 per ounce by 13:58 p.m. ET, having dropped to its lowest since July 21 earlier in the session.

U.S. futures settled 1% lower at $1,709.3.

Gold is considered a safe store of value during times of economic uncertainty, but a higher rate environment tends to take the shine off the asset as it does not pay any interest.

“If the Fed sticks to its inflation mandate and keeps rates elevated and refrains from cutting rates even in a recession, it will not bode well for gold,” said Daniel Ghali, commodity strategist at TD Securities.

“If gold breaks below the $1,675 range, we expect substantial selling pressure to emerge.”

Mirroring investors’ sentiment, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 31,294,673 ounces on Wednesday, the lowest since January. [GOL/ETF]

The index surged to its highest in 20 years, after data showing growth in U.S. manufacturing in August and a dip in Americans filing new claims for unemployment benefits last week gave the Federal Reserve more room to aggressively raise . [USD/][US/]

A higher makes bullion more expensive for overseas buyers. U.S. Treasury yields also advanced, increasing the opportunity cost of holding non-yielding bullion.

Spot silver fell 1% to $17.99, after hitting its lowest level in more than two years.

Platinum dipped 2.4% to $825.61 per ounce while palladium fell 3.5% to $2,011.48.

“As we are staring down the barrel of recession, industrial metal prices are particularly vulnerable,” Ghali added.

Asia’s factory activity slumped in August as lockdowns in China and cost pressures continued to hurt businesses, surveys showed.


(Reporting by Ashitha Shivaprasad, Seher Dareen and Rahul Paswan in Bengaluru; Editing by Krishna Chandra Eluri and Vinay Dwivedi)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link

Recent Posts

Scan to Download
ios&Android APP

Open trading account and start trading!

Join our happy customers