NEW YORK: Gold eased on Monday as markets priced in more monetary policy tightening this year from the US Federal Reserve and hawkish signals from other major central banks that strengthened the dollar. Spot gold fell 0.3percent to USD4,361.96 per ounce by 9:20 a.m. ET (1320 GMT).
US gold futures were down 0.6percent at USD4,400.00. The dollar edged higher against six major peers after gaining more than 1percent last week following the Fed’s rate hike. A stronger greenback makes bullion more expensive for holders of other currencies.
“We are seeing some lingering concerns among the bulls about tighter US monetary policy, which has pushed the US dollar index to a more than two month-high on Friday. Those bearish elements are working against the precious metals,” said Jim Wyckoff, a market analyst at American Gold Exchange.
Traders are now pricing in an 88percent chance of a US rate hike in December, according to the CME FedWatch Tool. Bullion is traditionally considered an inflation hedge, but loses its appeal to yield-bearing assets in a high interest rate environment.
Since the onset of the US-Israeli war on Iran, higher energy prices have stoked inflation concerns, forcing central banks around the world to adopt restrictive policy stances. This, in turn, has pressured gold prices, which are around 17percent lower than the session high on February 27.
Minneapolis Federal Reserve President Neel Kashkari said on Sunday that inflation is too high across all sectors of the US economy, not just oil.
Analysts at TD Securities said they anticipate “any near-term weakness in the precious metals market would be contained to only modest Commodity Trading Advisor (CTA) selling, and would increasingly be seen as a buying opportunity for the yellow metal.” Among other metals, spot silver rose 0.4percent to USD66.52, platinum gained 1.5percent to USD1,826.63, while palladium was up 1.8percent at USD1,325.52.
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