Gold extends fall by 1% on stronger dollar, US Fed rate-hike worries

Gold prices inched lower on Tuesday after falling more than 1% in the previous session, weighed down by an uptick in the U.S. dollar and worries over further U.S. interest rate hikes.

 

FUNDAMENTALS

 

Spot gold was down 0.1% at $1,777.46 per ounce, as of 0054 GMT, after hitting its lowest since Aug. 8 at $1,772.30 on Monday.

U.S. gold futures GCv1 eased 0.2% to $1,793.90 per ounce.

The dollar USD= rose 0.1% to a more than one-week high against its rivals, making gold more expensive for buyers holding other currencies. USD/

U.S. single-family homebuilders' confidence and New York state factory activity fell in August to their lowest levels since near the start of the COVID-19 pandemic, a further sign the economy is softening as the Federal Reserve raises interest rates. (Full Story)

Fed officials have maintained a hawkish tone and hinted at more rate hikes down the year to tame high inflation. (Full Story)

Although gold is seen as a hedge against inflation, rising U.S. interest rates dull non-yielding bullion's appeal.

Investors now await minutes from the Fed's July meeting on Wednesday for clues on further rate hikes.

Traders were pricing in around a 36.5% chance of a 75-basis-point rate hike by the Fed in September and a 63.5% chance of a 50 bps increase. FEDWATCH

SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 993.94 tonnes on Monday from 995.97 tonnes on Friday. GOL/ETF

Spot silver XAG= slipped 0.2% to $20.21 per ounce, platinum XPT= fell 0.4% to $929.29, and palladium XPD= was steady at $2,144.52.

DATA/EVENTS (GMT)

 

0430 Japan Tertiary Ind Act NSA June

0600 UK Claimant Count Unem Chng July

0600 UK ILO Unemployment Rate June

0600 UK HMRC Payrolls Change July

0630 India WPI Inflation YY July

0900 EU Total Trade Balance SA June

0900 Germany ZEW Economic Sentiment Aug

0900 Germany ZEW Current Conditions Aug

1230 US Housing Starts Number July

1315 US Industrial Production MM July

 

 

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)

((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 8067493865; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.net