Saturday, October 1

Gold faces longest monthly losing streak since 2018 on rate hikes


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Gold prices fell on Wednesday and were on

track to post their longest streak of monthly losses since 2018

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as traders anticipated more interest rate increases by central

banks to combat red-hot inflation.

Spot gold fell 0.8% to $1,710.70 an ounce by 0956

GMT. Bullion has lost about 3% so far in August, set for its

fifth straight month of declines.

US gold futures dipped 0.8% to $1,722.90.

Expect gold to fall to $1,600 by year-end as Federal Reserve

chair Jerome Powell’s determination to bring down inflation

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through tighter monetary policy will result in higher US real

rates and a stronger dollar, said UBS analyst Giovanni Staunovo.

Inflation has hit multi-decade highs in many parts of the

world, forcing central banks to tighten monetary policy. Gold is

highly sensitive to rising US interest rates, which increase

the opportunity cost of holding non-yielding bullion.

“The Fed does not have intentions to significantly ease in

the near term,” said DailyFX currency strategist Ilya Spivak.

“Their focus is on inflation.”

Traders will look at the US private payrolls report due at

1215 GMT for further clues on the resilience of the American

labor market.

“(But) don’t expect the data to materially affect the

direction of the gold price, although a strong number could

drive it lower,” said Michael Hewson, chief market analyst at

CMC Markets UK.

Spot silver fell 2.5% to $18.03 an ounce and was set

for its biggest monthly drop since September 2020.

Platinum slipped 0.7% to $841.40 and was headed for a

more than 6% drop over the month.

Palladium , meanwhile, dipped 0.4% to $2,078.81.

(Reporting by Arundhati Sarkar and Eileen Soreng in Bengaluru

Editing by David Goodman

)



financialpost.com