Gold slips on firmer dollar, Fed rate-hike fears

Gold slips on firmer dollar, Fed rate-hike fears

15 Aug    Finance News

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Gold prices slipped on Monday as the

dollar rebounded, with expectations of sharp interest rate hikes

from the Federal Reserve further pressuring the yellow metal.

Spot gold was down 0.6% at $1,791.33 per ounce, as of

0704 GMT, after rising about 1.6% last week. U.S. gold futures

fell 0.5% to $1,807.30.

The dollar erased earlier losses to strengthen 0.2%

against its rivals, making gold more expensive for buyers

holding other currencies.

“Gold looks like in some consolidation here for a week or

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two before resuming the upward march towards $2,000 yet again.

There may be even some who will feel the need to take profits to

offset property portfolio weakness,” said Clifford Bennett,

chief economist at ACY Securities.

“Gold is likely to be supported around $1,785. A slip to

$1,760 cannot be ruled out, but this would represent a fantastic

long-term buying opportunity.”

Meanwhile, Richmond Fed Bank President Thomas Barkin said on

Friday he wanted to raise interest rates further to bring

inflation under control.

Investors will be watching out for minutes from the Fed’s

last monetary policy meeting due on Wednesday for more clues on

future rate hikes.

Traders were pricing in around a 44.5% chance of a

75-basis-point rate hike by the Fed in September and a 57.5%

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chance of a 50 bps increase.

Although gold is seen as a hedge against inflation, rising

U.S. interest rates dim non-yielding bullion’s appeal.

“Gold recorded its fourth consecutive weekly gain amid

easing inflationary pressures. However, those same issues may

ultimately be a negative,” ANZ analysts said in a note.

On the technical front, spot gold is biased to retest a

support $1,784 per ounce, a break below which may cause a fall

into a range of $1,767-$1,773, according to Reuters technical

analyst Wang Tao.

Elsewhere, spot silver dropped 1.2% to $20.57 per

ounce, platinum fell 1.3% to $950.37 and palladium

was steady at $2,222.23.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu and Vinay Dwivedi)

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