Gold prices hit near one-year low on strong dollar; Spot gold reaches $1,693.90 per ounce

Spot gold was down 0.2% at $1,693.90 per ounce by 0052 GMT, after falling to its lowest since early August 2021 at $1,691.40 in early Asian trade. US gold futures fell 0.5% to $1,692.10 per ounce.
Gold prices fell on Thursday to their lowest in nearly a year, as an elevated US dollar and prospects of more interest rate hikes by major central banks to combat soaring inflation weighed on bullion’s appeal.

FUNDAMENTALS

  • Spot gold was down 0.2% at $1,693.90 per ounce by 0052 GMT, after falling to its lowest since early August 2021 at $1,691.40 in early Asian trade.
  • US gold futures fell 0.5% to $1,692.10 per ounce.
  • The dollar held below two-decade highs against its rivals, making greenback-priced bullion more expensive for buyers holding other currencies.
  • The European Central Bank will raise interest rates for the first time in 11 years on Thursday with a bigger-than-flagged move seen as increasingly likely as policymakers fear losing control of runaway consumer price growth.
  • The US Federal Reserve is widely expected to raise interest rates by 75 basis points at its policy meeting next week.
  • British inflation in June surged to a 40-year peak, bolstering chances of a half-percentage-point Bank of England rate hike next month.
  •  Although gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding bullion, which pays no interest.
  • SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.3% to 1,005.87 tonnes on Wednesday from 1,009.06 tonnes on Tuesday.
  • European Union diplomats meeting in Brussels on Wednesday agreed a new round of sanctions against Moscow for invading Ukraine, including a ban on importing gold from Russia.
  • Spot silver was flat at $18.66 per ounce, platinum eased 0.2% to $856.12, and palladium rose 0.2% to $1,864.83.