Gold extends fall as strong dollar, higher US rates take toll

Ashitha Shivaprasad Sun, October 1, 2023, 11:45 PM EDT In this article: 

By Ashitha Shivaprasad

(Reuters) – Gold extended its decline for a sixth straight session on Monday to hit a near seven-month trough, as a robust dollar and prospects of higher U.S. interest rates took the shine off bullion.

Spot gold was down 0.9% by 11:36 a.m. EDT (1536 GMT) at $1,832.10 per ounce, after hitting its lowest since March 9. U.S. gold futures slipped 0.9% to $1,848.50.

“There is a reckoning that interest rates are going to be higher for much longer, which has been the bearish element in the precious market. Gold prices could go below $1,800 in the near-term,” said Jim Wyckoff, senior analyst at Kitco Metals.

“Trends in the currency markets tend to be stronger and longer lasting. The appreciation of the U.S. dollar may not end anytime soon, pressuring the gold market.”

The U.S. dollar rose 0.5%, making bullion less attractive to other currency holders. [USD/]

Traders are pricing in a 55% chance that the Federal Reserve will leave interest rates at the current range of 5.25%-5.50% this year, according to CME’s FedWatch tool.

Federal Governor Michelle Bowman said she remains willing to support another increase in rates if incoming data shows progress on inflation is stalling or proceeding too slowly.

Since powering above the key $2,000-per-ounce level in early May, gold prices have fallen more than 11%, or $230, pressured by a sharp rise in benchmark U.S. Treasury yields, which makes the non-yielding gold less attractive. [US/]

“The buying on dips (in gold) by central banks is now conspicuously absent,” said Tai Wong, a New York-based independent metals trader.

The market focus now shifts to Fed Chair Jerome Powell’s speech later in the day as well as on job openings data, private hiring numbers and U.S. non-farm payrolls over the course of the week.

Spot silver slid 4.1% to a more-than-six-month low of $21.24 per ounce.

Platinum fell 2.2% to $885.02 and palladium dipped 2.8% to $1,210.90.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Nick Macfie and Christina Fincher)

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