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Friday, March 31, 2023

Gold dips to one-year low as US dollar firms

Gold dips to one-year low as US dollar firmsNEW YORK/LONDON: Gold sank to a one-year low on Thursday as the dollar rose after comments from Federal Reserve Chairman Jerome Powell that reaffirmed expectations more US interest rate increases are on the way this year.

Bullion is highly exposed to US interest rates, as higher rates raise the opportunity cost of holding non-yielding assets and boost the dollar.

The Fed raised rates in June and policymakers have indicated they expect two more increases this year. Powell said nothing in two days of congressional testimony this week to suggest otherwise.

Spot gold was down 0.3 percent at $1,223.15 per ounce by 2:15 p.m. EDT (1815 GMT), having earlier touched $1,211.08, its lowest since July 2017. US gold futures for August delivery settled down $3.90, or 0.3 percent, at $1,224 per ounce.

Gold prices later turned positive, albeit briefly, as the dollar declined against a basket of currencies after US President Donald Trump told CNBC television he is “not thrilled” about interest rate increases because they strengthened the dollar, making US exports more expensive overseas.

But the greenback regained some of its losses, barely changed from the previous session’s close. Gold prices rose to match the previous session’s highs before returning to negative territory.

“There was technical selling after a fundamentally bullish news spike,” said Dan Hussey, senior market strategist of RJO Futures.

Global trade tensions have not driven investors to purchase gold, traders said. Bullion is generally regarded as a safe and stable store of value during times of global uncertainty.

“If trade tensions hamper global growth, that’ll impact demand,” said Chris Gaffney, president of world markets at TIAA Bank.

The dollar earlier rose to a one-year high against a basket of six major currencies, supported by Powell’s bullish comments.

Among other precious metals, silver dropped 0.7 percent to $15.42 an ounce, after plunging to a one-year low of $15.13.

Platinum lost 0.6 percent at $808.50 per ounce, earlier dropping to $788, its lowest since December 2008.

Palladium fell 3.1 percent to $878 per ounce, having slipped to its lowest since July 2017 at $859.50.

Copyright Reuters, 2018

Source: Brecorder

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