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Gold slumps on dollar rally, Fed rate-hike worries

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Gold prices fell to near a one-month low

on Monday amid sharp declines in precious metals due to a

stronger dollar, with looming Federal Reserve interest rate

hikes also denting bullion’s appeal.

Extending losses into a sixth session, spot gold was

down 0.6% at $1,736.74 per ounce by 1:51 p.m. ET (1751 GMT)

after hitting its lowest since July 27 earlier in the session.

U.S. gold futures settled down 0.8% at $1,748.4.

The dollar hit a fresh five-week high versus major

currencies, making greenback-priced gold more expensive for

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overseas buyers.

Gold is under pressure from the dollar and market

expectations that Fed Chair Jerome Powell will reinforce the

U.S. central bank’s hawkish stance in a speech at the Jackson

Hole, Wyoming central banking conference later this week, said

Daniel Ghali, commodity strategist at TD Securities.

Prices could dip below $1,700 after the Jackson Hole

conference, Ghali added. Higher interest rates raise the

opportunity cost of holding gold, which does not pay any


According to economists in a Reuters poll, the Fed is likely

to raise its interest rate by 50 basis points in September amid

expectations U.S. inflation has peaked and on growing recession


In the short term, gold could face pressure again as the Fed

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is likely to raise rates further until the end of the year, but

once the rate hike cycle comes to an end, gold should start to

rise, Commerzbank said in a note.

According to data on Friday, speculators also cut their net

long COMEX gold and net short silver position in the week to

Aug. 16.

Spot silver fell 0.3% to $18.96 after touching its

lowest in four weeks earlier in the session.

“Silver prices have been underperforming in the recent

trading sessions, this reflects a slowing industrial demand for

silver as well as deteriorating speculative appetite,” Ghali


Platinum dropped 2.3% to $875.42, while palladium

sank 6.2% to $1,992.18.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Paul

Simao, Bernadette Baum and Vinay Dwivedi)



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