Gold struggles for traction as interest rate hike bets, dollar dim appeal

Spot gold was little changed at $1,734.59 per ounce by 0916 GMT after hitting $1,722.36 earlier in the session, its lowest since Sept. 30. US gold futures rose 0.1% to $1,733.60.

gold
Photo: Unsplash/Jingming Pan
Reuters
2 min read Last Updated : Jul 12 2022 | 3:53 PM IST

By Arundhati Sarkar

(Reuters) - Gold steadied on Tuesday after dropping to a nine-month low earlier as investors positioned for U.S. economic data, with a strong dollar and bets for steep interest rate hikes still keeping a leash on non-yielding bullion.

Spot gold was little changed at $1,734.59 per ounce by 0916 GMT after hitting $1,722.36 earlier in the session, its lowest since Sept. 30. U.S. gold futures rose 0.1% to $1,733.60.

The dollar climbed to a 20-year peak against a basket of major rivals, making greenback-priced gold more expensive for buyers holding other currencies. [USD/]

"Gold is set to stay significantly suppressed over the near-term, as the weight of more incoming super-sized Fed rate hikes hang like a millstone around gold's neck," said Han Tan, chief market analyst at Exinity.

"A higher-than-expected headline CPI print (on Wednesday)should pave the way for yet another 75 basis points hike by the Fed later this month; a scenario widely interpreted to be a negative for gold," Tan added.

However, offering some support for zero-yield gold, benchmark U.S. 10-year Treasury yields dropped for a second consecutive session. [US/]

A raft of U.S. economic data - including consumer prices, retail sales and factory output - should provide a glimpse of the extent to which inflation has peaked as the Federal Reserve moves closer to next week's policy meeting.

Meanwhile, the euro sank to within a whisker of parity with the dollar and stock markets fell as the prospect of further central bank tightening and worries about the health of economies worldwide unnerved investors. [MKTS/GLOB]

"Gold seems to have found a few friends near $1,730 over the last couple of days, without ever seriously looking like it would reverse its recent selloff," OANDA senior analyst Jeffrey Halley said.

Spot silver dropped 1% to $18.90 per ounce, platinum fell 1.7% to $855.04 and palladium slipped 1.4% to $2,132.90.

 

(Reporting by Arundhati Sarkar and Bharat Govind Gautam in Bengaluru; Editing by Krishna Chandra Eluri)

(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.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :Gold Interest rate hikeDollarUS economyUS Treasuries

First Published: Jul 12 2022 | 3:52 PM IST

Next Story