Gold prices fell 2% on Thursday to their lowest level in a week as the dollar soared after the Federal Reserve announced it will witness more interest rate hikes next year.
Sharjah 24 – Reuters:
Gold prices fell as much as 2% on Thursday to their lowest level in a week as the dollar soared after the US Federal Reserve announced that next year will witness further hikes in taxi.
Spot gold was down 1.2% to $1,785.36 an ounce by 14:56 GMT, after falling to $1,771.89 an ounce earlier in the session.
U.S. gold futures fell 1.3% to $1,794.40.
Daniel Ghaly, commodity strategist at TD Securities, explained that the Federal Reserve is currently sticking to its message of monetary tightening despite the fading growth outlook and, in turn, without the prospect of rate cuts on the horizon, it will be very hard. Speculators have to convert their capital into gold.
The Federal Reserve raised interest rates by 50 basis points as expected on Wednesday, but gold fell 0.8% after comments from US central bank President Jerome Powell indicated interest rates interest should remain high for a longer period.
Gold is an inflation hedge, but high interest rates tend to weaken its attractiveness by increasing the opportunity cost of holding non-productive metal.
As for other precious metals, silver fell 2.1% to $23.39 an ounce, platinum fell 1.6% to $1012.50, while palladium was down 1.8% to $1882.75.
