© Archyde.com. Gold bars displayed at a Seoul store in South Korea – Photo from Archyde.com archive.
(Archyde.com) – It fell as much as 2 percent on Thursday, its lowest level in a week, with a rise after the Federal Reserve (the US central bank) said that next year will see more interest rate hikes.
It fell 1.2 percent to $1,785.36 an ounce by 1456 GMT, after falling earlier in the session to $1,771.89 an ounce.
US gold futures fell 1.3 percent, to $1,794.40.
“For the time being, the Fed is staying true to its hawkish message despite the dimming outlook for growth,” said Daniel Ghaly, commodities strategist at TD Securities. “In contrast, with no prospect of a (interest rate) cut on the horizon, it will be very difficult. Speculators should convert their capital into gold.
On Wednesday, the Federal Reserve raised interest rates by 50 basis points as expected, but gold fell 0.8% after comments from US central bank chief Jerome Powell indicated that interest rates are expected to remain high for a longer period.
Powell said on Wednesday that the US Central Bank will adopt more interest rate hikes next year, even though the US economy is slipping into a possible recession, and he explained that the economy will incur a higher price if the Federal Reserve does not curb inflation strongly.
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, it fell 2.1 percent to $ 23.39 an ounce, and platinum fell 1.6 percent to $ 1012.50, while it fell 1.8 percent to $ 1882.75.
(Prepared by Salma Najm and Noha Zakaria for the Arabic Bulletin – Edited by Mostafa Saleh)