NEW YORK: Gold prices slid over 1% to more than a two-week low on Thursday, as the dollar rallied after robust US economic data strengthened the case for an interest rate hike by the Federal Reserve in March.
Spot gold was down 1.4% to $1,792.68 an ounce by 12:29 p.m. EST (1729 GMT), having hit a low of $1,790.20. US gold futures dropped 2.1% to $1,792. The drop in gold prices is a continuation of Wednesday’s selloff as markets further digested Fed Chair Jerome Powell’s comments on raising rates, said Philip Streible, chief market strategist at Blue Line Futures in Chicago.
US economic growth accelerated in the fourth quarter to post its best performance in nearly four decades in 2021. Further hurting safe-haven gold’s appeal for overseas buyers, the dollar soared to its highest levels since July 2020.
Gold prices will drift lower in 2022 and 2023 as central banks raise interest rates, lifting bond yields and making non-yielding bullion less attractive, a Reuters poll showed. Bullion has declined more than 3% since hitting its highest price in 10 weeks on Tuesday on the back of safe-haven buying driven by Russia-Ukraine tensions.
“Any rebound not backed by safe-haven seekers should thus run into resistance sooner or later as long as the economy is in recovery mode,” Julius Baer analyst Carsten Menke wrote in a note. Menke added that he did not see a broad-based move into gold from safe-haven seekers but rather some selective buying which should remain the case as long as the economic backdrop does not sharply deteriorate.
Elsewhere, spot silver dropped 3.7% to $22.61 an ounce, set its for biggest one-day decline since the end of September. Platinum fell 1.2% to $1,019.06 an ounce and palladium gained for the eighth straight session by 2.4% to $2,385.85. A Reuters survey showed that palladium prices are expected to gradually fall as automakers switch to using platinum in autocatalysts to cut costs.
Comments
Comments are closed for this article.