Gold prices fell 2% today, Thursday, to their lowest level in a week, with the rise of the dollar, after the Federal Reserve announced that next year will witness more interest rate hikes.
Sharjah 24 – Archyde.com:
Gold prices fell, by as much as 2%, today, Thursday, to their lowest level in a week, with the rise of the dollar, after the US Federal Reserve announced that next year will witness more rate hikes.
Spot gold fell 1.2% to $1,785.36 an ounce by 14:56 GMT, after falling earlier in the session to $1,771.89 an ounce.
US gold futures fell 1.3%, to $1,794.40.
Daniel Ghaly, commodity strategist at TD Securities, explained that the Federal Reserve is currently keeping its message of monetary tightening despite the declining outlook for growth, and in turn, without a prospect of a rate cut on the horizon, it will be very difficult. Speculators have to convert their capital into gold.
On Wednesday, the Federal Reserve raised interest rates by 50 basis points as expected, but gold fell by 0.8%, after comments from US Central Bank Chairman Jerome Powell indicated that interest rates are expected to remain high for a longer period.
Gold is a hedge against inflation, but high interest rates tend to weaken its attractiveness, because they increase the opportunity cost of holding non-yielding metal.
As for other precious metals, silver fell 2.1% to $23.39 an ounce, platinum fell 1.6% to $1012.50, while palladium fell 1.8% to $1882.75.