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Gold falls 1% on surging dollar, hawkish Fed view

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Gold prices fell as much as 1% on

Thursday, as the U.S. dollar rallied and the Federal Reserve

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flagged more interest rate hikes, diminishing the zero-yielding

metal’s appeal.

Spot gold fell 0.8% to $1,660.21 per ounce by 0615

GMT, not far from a more than two-year low of $1,653.10 touched

last week. Bullion prices have declined 9% so far in the year.

U.S. gold futures were down 0.4% at $1,669.30.

“The stage setting from FOMC (Federal Open Market Committee)

suggests that there’s quite a bit more room for real rates to

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keep going higher and that’s not an environment very

gold-supportive,” said Ilya Spivak, a currency strategist at


The Fed hiked interest rates by 75 basis points on Wednesday

for a third straight time and Chair Jerome Powell said bringing

down inflation was their “overarching focus.”

The Fed also projected its policy rate rising at a faster

pace and to a higher level than expected, the economy slowing

and unemployment rising.

“The rapid pace of hikes is certainly going to weigh on gold

prices, but eventually the concerns about growth and recession

will come to the fore and lead to renewed buying interest in

gold at lower levels,” said Sugandha Sachdeva, vice president of

commodity and currency research at Religare Broking.

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“Even as some more pressure is likely, we don’t foresee

prices slipping below the $1,580 mark. The $1,620 to $1,580 area

is likely to provide a floor to the metal.”

Even though gold is seen as a hedge against inflation and

economic uncertainties, investors may favor other

interest-yielding assets in a high-interest rate environment.

The dollar rallied to a new two-decade high, making the

greenback-priced metal more expensive for buyers holding other


Spot silver dropped 1.1% to $19.37 per ounce,

platinum slipped 0.6% to $901.86 and palladium

fell 0.7% to $2,139.59.

(Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu




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