Gold prices fell more than 1% as the
dollar jumped after an unexpected rise in August consumer prices
cemented bets for aggressive rate hikes from the US Federal
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.
“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
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
Spot silver fell 1.2% to $19.55 per ounce, having
recorded its biggest one-day percentage gain since February 2021
“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)