Gold hits near one-year low on dollar strength, imminent rate hikes

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Gold prices fell on Thursday to their

lowest in nearly a year, as an elevated U.S. 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.

* U.S. 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

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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 U.S. 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

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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.

DATA/EVENTS (GMT)

0645 France Business Climate Mfg July

1215 EU ECB Refinancing Rate July

1215 EU ECB Deposit Rate July

1230 US Initial Jobless Clm Weekly

1230 US Philly Fed Business Indx July

1415 EU ECB President Christine Lagarde presents the latest

monetary policy decisions

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu)