BENGALURU: Gold extended its decline for a sixth straight session on Monday to hit a near seven-month trough, as a robust dollar and prospects of higher US interest rates took the shine off bullion. Spot gold was down 0.9% by 11:36 a.m. EDT (1536 GMT) at $1,832.10 per ounce, after hitting its lowest since March 9. US gold futures slipped 0.9% to $1,848.50.
“There is a reckoning that interest rates are going to be higher for much longer, which has been the bearish element in the precious market.
Gold prices could go below $1,800 in the near-term,” said Jim Wyckoff, senior analyst at Kitco Metals. “Trends in the currency markets tend to be stronger and longer lasting.
The appreciation of the US dollar may not end anytime soon, pressuring the gold market.” The US dollar rose 0.5%, making bullion less attractive to other currency holders. Traders are pricing in a 55% chance that the Federal Reserve will leave interest rates at the current range of 5.25%-5.50% this year, according to CME’s FedWatch tool.
Federal Governor Michelle Bowman said she remains willing to support another increase in rates if incoming data shows progress on inflation is stalling or proceeding too slowly. Since powering above the key $2,000-per-ounce level in early May, gold prices have fallen more than 11%, or $230, pressured by a sharp rise in benchmark US Treasury yields, which makes the non-yielding gold less attractive.
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