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Gold pulled 1% lower by strong dollar, big Fed hike bets

October 10, 2022By Reuters

Oct 10 (Reuters) – Gold prices fell more than 1% on Monday, as an elevated dollar and solidifying bets for an aggressive interest rate hike from the US Federal Reserve pushed the non-yielding bullion to its lowest in a week.

Spot gold fell 1.4% to USD 1,670.89 per ounce by 13:52 a.m. EDT (1752 GMT) while US gold futures settled down 2% at USD 1,675.2.

Gold has now fallen for a fourth consecutive session, in potentially its worst run since mid-August.

Rising interest rates and a strong US dollar are continuing to pressure gold and are overwhelming any safe-haven demand currently arising from the latest escalation in the Ukraine crisis, said David Meger, director of metals trading at High Ridge Futures.

The dollar climbed to its highest since Sept. 29, making gold priced in the US currency more expensive for overseas buyers.

Fed fund futures are now pricing in a 92% chance of a 75-basis-point hike at the next Fed meeting. Higher interest rates increase the opportunity cost of holding zero-yield bullion.

Russia rained cruise missiles on busy Ukrainian cities on Monday in what the United States called “horrific strikes”, killing civilians and knocking out power and heat with its most widespread air attacks since the start of the war.

“We’re back at USD 1,680 level again … and gold will remain under some downside pressure in the short term,” said Ross Norman, an independent analyst.

Investors now look to key US inflation data due later this week.

The Fed may still be able to lower inflation without a sharp rise in unemployment even as it keeps raising interest rates, Chicago Fed president Charles Evans said on Monday, a rebuttal to arguments the US central bank is pushing the world and the United States towards a potentially sharp downturn.

Spot silver dropped 2.2% to USD 19.66 per ounce, and platinum fell 1.2% to USD 901.06. Palladium gained 0.2% to USD 2,186.03.

(Reporting by Bharat Govind Gautam and Brijesh Patel in Bengaluru; Editing by Tomasz Janowski)


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