PRECIOUS gold shine fades as dollar recovers, rate hike fears emerge
Band Ashitha Shivaprasad
May 18 (Reuters) – Gold prices fell on Wednesday as looming US interest rate hike fears and a resurgent dollar dulled the metal’s shine.
find gold XAU= was down 0.1% to $1,812.94 an ounce by 10:12 a.m. EDT (1412 GMT), erasing small gains from earlier in the day that may have been driven by growth risks related to rising inflation.
US Gold Futures GCv1 fell 0.5% to $1,809.50.
Federal Reserve Chair Jerome Powell vowed on Tuesday that the Federal Reserve would raise interest rates as high as needed to stem a spike in inflation.
“The Fed’s renewed commitment to fighting inflationary pressures is eating away at the gold market,” said David Meger, head of metals trading at High Ridge Futures.
“The real question and the heart of the situation is whether what the Fed is doing is enough given the level of inflation. If not enough to contain inflationary pressures, gold will be supportive in this environment.”
Gold is considered a hedge against inflation. However, rising US interest rates are dampening interest in non-interest bearing bullion.
Meanwhile, the rival safe-haven dollar rallied after posting its biggest one-day loss in more than two months, further dampening appetite for gold among overseas buyers. USD/
Investors find Powell’s recent comments unsurprising but certainly hawkish, Kitco senior analyst Jim Wycoff said in a note.
Inflows into the SPDR Gold Trust GLDthe world’s largest gold-backed exchange-traded fund, continued to decline, reflecting bearish market sentiment. GOL/ETF
UK inflation rose to a 40-year high last month, putting the Bank of England under pressure to keep raising interest rates despite the risk of a recession.
spot silver XAG= fell 0.6% to $21.49 an ounce while platinum XPT= fell 1.2% to $939.94 and palladium XPD= fell 0.1% to $2,050.64.
Spot gold versus SPDR Gold Trust holdingshttps://tmsnrt.rs/3FWRQSv
(Reporting by Ashitha Shivaprasad and Swati Verma in Bengaluru; Editing by Shinjini Ganguli)
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