Gold prices fell to their lowest level in eight weeks yesterday, Thursday, amid the dollar’s rise and bets that the Federal Reserve (the US central bank) will raise interest rates by a large percentage to tame the rising inflation.
Spot gold fell 0.4% to $ 1,688.49 an ounce, after hitting its lowest level since July 21 at the start of the session.
US gold futures fell 0.6% to $ 1,698.10, according to Reuters.
The dollar index was up 0.2%, well below its two-decade high last week, as larger-than-expected inflation data reinforced bets for a significant tightening of monetary policy from part of the Federal Reserve.
Federal Reserve Fund futures are now priced on a 37% chance that the Federal Reserve will raise interest rates by 100 basis points at next week’s monetary policy meeting.
Gold is generally considered a hedge against inflation, but it does not generate returns, so it is sensitive to interest rates and Treasury yields.
Meanwhile, IMF chief Kristalina Georgieva on Wednesday said central bankers should persevere in the fight against large-scale inflation.
As for other precious metals, silver fell in spot transactions 1.3% to $ 19.44 an ounce, platinum fell 0.1% to $ 905.16, and palladium fell 0.8% to $ 2,141.30.
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