Monday, October 3

Rate hike rush pushes gold to longest monthly losing streak in 4 years


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Gold slipped on Wednesday and was on

track for its longest run of monthly losses since 2018,

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pressured by aggressive rate hikes by major central banks across

the world.

Spot gold fell 0.6% to $1,712.56 an ounce by 0203

pm ET. Bullion has lost about 3% so far in August, and was set

for its fifth straight month of declines.

US gold futures settled 0.6% lower at $1,726.2.

It’s getting much more clearer that central banks are going

to be aggressive with tightening due to unprecedented

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inflationary pressure, which is not good for gold, said Edward

Moya, senior analyst with OANDA.

The US Federal Reserve’s Loretta Mester said the central

bank would need to raise interest rates somewhat above 4% by

early next year.

Meanwhile, Euro zone inflation jumped to another record high

and will soon enter double-digit territory, heralding a string

of big rate hikes.

Gold is known as a safe investment during economic and

geo-political crisis, but a high-interest rate environment makes

the non-yielding asset less attractive to investors.

Bullion’s reaction as it approaches the key $1,700 level

will demonstrate the amount of support that remains for the

metal amid fears of a global recession and the Ukraine war,

Kinesis Money analyst Rupert Rowling said in a note.

Investors also took stock of data that showed US private

payrolls increased by 132,000 jobs in August after rising

270,000 in July.

Spot silver fell 2.6% to $18.00 an ounce. It was down

11% this month and on track for its biggest monthly drop since

September 2020.

Platinum dipped 0.6% to $842.30. Palladium

edged 0.7% lower to $2,072.53.

China’s factory activity in the coming months is going to be

key to industrial metal demand, OANDA’s Moya added.

(Reporting by Ashitha Shivaprasad and Rahul Paswan in

Bengaluru; Editing by Shailesh Kuber)



financialpost.com