Gold Prices Fall As Investors Assess Rate Hike Outlook

Recent central bank rate hikes have weighed on appetite for the metal. (File)

Gold prices were set to break their three-session winning run on Thursday, weighed down by a firmer dollar and as bullion’s outlook remains clouded by prospects of further interest rate hikes from the U.S. Federal Reserve.

Spot gold was down 0.2% at $1,832.60 per ounce as of 0845 GMT, after hitting a one-week peak in the previous session. U.S. gold futures fell 0.4% to $1,838.30.

“Near-term challenges remain for gold and the other precious metal on further rate hikes,” said UBS analyst Giovanni Staunovo. “The focus of market participants remains on U.S. economic data and how it impacts the monetary policy of the Fed.”

The Institute for Supply Management survey on Wednesday showed raw materials prices increasing last month, with the rebound in prices at the factory gate suggesting inflation could remain elevated for a while.

While gold is considered a hedge against inflation, recent central bank rate hikes to bring down price pressures have weighed on appetite for the metal since it yields no interest.

U.S. central bank officials were divided on Wednesday over whether recent high inflation data and a continually hot jobs market will require even more restrictive interest rates, or just patience in maintaining tight monetary policy for a longer period of time.

Investors will be watching U.S. weekly initial jobless claims data due at 1330 GMT.

Further weighing on bullion, benchmark U.S. 10-year Treasury yields scaled their highest level since early November 2022, while the U.S. dollar gained 0.3%.

Elsewhere, spot silver dipped 0.8% to $20.82 per ounce. Platinum fell 0.1% to $954.13 and palladium lost 0.6% to $1,431.13.

“We continue to favor platinum over palladium, with platinum benefiting from power outages in South Africa, the largest platinum producer, while palladium suffers from weaker growth in North America and Europe,” Staunovo added.

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