Saturday, October 1

Gold dips as dollar gains on sharp rate-hike bets after US CPI data


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Gold prices fell more than 1% as the

dollar jumped after an unexpected rise in August consumer prices

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cemented bets for aggressive rate hikes from the US Federal

Reserve.

Spot gold prices fell 1.1% to $1,705.94 per ounce by

11:04 am ET (1504 GMT).

US gold futures fell 1.3% to $1,717.30.

“Gold has gapped lower on higher-than-expected CPI, with 75

basis points now definitely confirmed. The USD is surging and

may continue to pressure gold,” said Tai Wong, a senior trader

at Heraeus Precious Metals in New York.

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“Gold is likely to hold the $1,690-1700 range in the short

term with the USD unlikely to make new highs unless there’s a

very hawkish Fed result next week. It’s likely though they will

wait and see as the meeting after that is in November,” Wong

said.

Monthly US consumer prices unexpectedly rose in August as

declining gasoline prices were offset by gains in the costs of

rent and food.

The dollar index rose 1%, making gold more expensive

for overseas buyers.

“All in all, this basically points to continued work from

the FOMC to bring inflation under control,” said Ole Hansen,

head of commodity strategy at Saxo Bank.

Markets now see an 81% chance of a 75-basis-point rate hike

by the Fed at its Sept. 20-21 meeting.

Although gold is considered a hedge against inflation,

rising US rates increase the opportunity cost of holding

bullion.

Spot silver fell 1.2% to $19.55 per ounce, having

recorded its biggest one-day percentage gain since February 2021

on Monday.

“Following a ferocious short squeeze in silver, with 54% of

silver’s demand tied to fabrication, silver also remains highly

sensitive to our deteriorating gauge of commodity demand,” TD

Securities said in a note.

Spot platinum fell 0.8% to $899.61, while palladium

dropped 5.5% to $2,141.02.

(Reporting by Kavya Guduru and Arundhati Sarkar in Bengaluru;

Editing by Mark Porter and Vinay Dwivedi)



financialpost.com

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