Gold at over 1-month low after Fed's hint of early rate hikes

Gold prices hovered near a more than one-month low on Thursday as the dollar and US Treasury yields jumped after Federal Reserve officials projected interest rate hikes sooner than expected.

FUNDAMENTALS

• Following a drop of 2.5% in the previous session to its lowest since May 6 at $1,803.79 per ounce, spot gold was slightly up 0.2% as of 0039 GMT in early Asian trade.

• US gold futures were down 2.4% at $1,816.90 per ounce.

• The dollar index jumped to its highest level in two months against its rivals, making gold more expensive for holders of other currencies.

• The benchmark 10-year yield rose to its highest level since June 4 at 1.594%, increasing the opportunity cost of holding non-interest bearing gold.

• The Fed on Wednesday began closing the door on its pandemic-driven monetary policy as officials projected an accelerated timetable for interest rate increases, opened talks on how to end crisis-era bond-buying and said the 15-month-old health emergency was no longer a core constraint on US commerce.

• Futures on the federal funds rate, which track short-term interest rate expectations, raised bets that the US central bank will tighten monetary policy in early 2023 after Fed projections showed at least two rate increases that year.

• Higher interest rates will dull gold's appeal as they translate into a higher opportunity cost of holding it.

• SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.1% to 1,045.78 tonnes on Wednesday.

• Inflation expectations in Britain are well anchored around the Bank of England's target of 2%, finance minister Rishi Sunak said after data showed inflation broke above the target for the first time in nearly two years.

• Silver gained 0.6% to $27.14 per ounce, palladium eased 0.1% to $2,794.16, while platinum rose 0.1% to $1,123.50.