Gold prices slipped on Monday, pressured
by a firmer dollar as investors braced for aggressive rate hikes
by major central banks this week, especially from the U.S.
Federal Reserve, to tame high inflation.
Spot gold was down 0.6% at $1,665.08 per ounce, as of
0623 GMT. U.S. gold futures fell 0.6% at $1,673.30.
Trading is expected to be light with bullion market in
London, the world’s biggest trade center for physical gold,
being closed for Queen Elizabeth’s funeral.
The dollar index gained 0.2%, making bullion more
expensive for overseas buyers.
“We’ll see some choppy, sideways trade leading up to the
FOMC meeting, with $1,680 likely being a pivotal level for
traders over the near-term,” said Matt Simpson, a senior market
analyst at City Index.
“A hawkish hike would be another nail in the gold coffin,
and will likely send prices down to the $1600–$1650 range.”
The U.S. Fed’s Federal Open Market Committee is expected to
begin its two-day meeting on interest rates on Sept. 20 and
announce its decision the following day. Markets are fully
pricing in a 75-basis-point rate hike by the U.S. central bank.
Most of the banks meeting this week – from Switzerland to
South Africa – are expected to hike, with markets split on
whether the Bank of England will go by 50 or 75 basis points.
U.S. consumers’ near-term inflation expectations fell to a
one-year low in September, easing fears that the Fed could raise
interest rates by a full percentage.
Gold is known as a safe investment amid inflation woes, but
high interest rates increase the opportunity cost of holding
“Rising geopolitical and economic risks are doing little to
entice (safe) haven buying, with the U.S. dollar still the asset
of choice,” said ANZ in a note.
Spot silver lost 1.2% to $19.32 per ounce, platinum
fell 0.8% to $900.17 and palladium was down 1.7%
(Reporting by Brijesh Patel and Ashitha Shivaprasad in
Bengaluru; Editing by Sherry Jacob-Phillips)