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Gold slips 1 percent as dollar rallies on hawkish Fed

Reuters  |  BENGALURU 

By Layek

BENGALURU (Reuters) - Gold headed for its biggest weekly fall since August on Friday as the dollar rose towards 16-month highs after the stuck to its tighter monetary stance and looked set to deliver another rate hike in December.

Spot gold was down 0.9 percent at $1,212.20 per ounce at 1341 GMT, having touched its lowest since Oct. 31 at $1,211.32 earlier. U.S. gold futures fell 1 percent to $1,212.9 per ounce.

Spot prices are down 1.6 percent for the week so far, which would be its biggest decline since the week of Aug. 17.

"It is pretty clearly a dollar-related move today, which has happened since the latest decision from the U.S. Fed," said

The sentiment in the market "is quite cautious after recent spikes, consolidating in the $1,220 to low $1,230 levels and not breaking out of that," he said.

Spot gold touched a peak of $1,243.32 on Oct. 26, its highest since mid-July.

The dollar firmed towards a 16-month peak on Friday, underpinned by a robust U.S. economy and a rising interest rate environment, making bullion more expensive for holders of other currencies. [USD/]

Rate increases also pressure gold prices by increasing the opportunity cost of holding non-yielding bullion.

"We remain cautious on gold here as roughly half the recent advance seems to have been rolled back in recent days on account of a stronger dollar and more resiliency in U.S. equity markets," said in a note.

"In addition, U.S. interest rates seem to be on the march again," he added. "There is not much of an upside trigger that could lead to a sustainable rally."

The Fed indicated on Thursday that it remained on track to keep gradually tightening borrowing costs after hiking rates three times this year, with another increase expected in December.

"We are expecting the current Fed tightening cycle to end... by the middle of next year," Strachan said "So we are expecting gold prices to rise to $1,300 by the end of next year."

Among other precious metals, silver dropped 1.1 percent to $14.24 per ounce. The was headed for its biggest weekly percentage decline in 12 weeks, slipping more than 3 percent so far.

Platinum dipped 1.1 percent to $854.24 an ounce. The was down 1 percent so far for the week, its biggest fall since late September.

Palladium fell 1.2 percent to $1,110.40 per ounce.

(Reporting by Layek and in Bengaluru; Editing by and Jan Harvey)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, November 09 2018. 19:42 IST
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