Gold price slips to 3-week low on Fed rate hike expectations
London (Mar 7) Gold hit a three-week low on Tuesday as expectations for a U.S. interest rate hike this month weighed, but moves were muted as markets awaited U.S. data this week and more pointers on the Trump administration's economic plans.
The precious metal has fallen in five out of the last six sessions as expectations for the Federal Reserve to push ahead with a U.S. rate increase this month ramped up.
Spot gold was down 0.2 percent at $1,223.59 an ounce at 1230 GMT, having earlier touched its lowest since Feb. 15 at
$1,222.29 an ounce. U.S. gold futures for April delivery
were down $1.90 an ounce at $1,223.60.
The metal slipped last week after comments from U.S. Federal
Reserve Chair Janet Yellen that the Fed was poised to lift
benchmark U.S. rates were seen as cementing plans for an
increase at the Fed's March 14-15 meeting.
Gold is highly sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar in which it is priced.
"We're now expecting seven rate hikes for 2017/2018, and I
think that will put more pressure on gold," Natixis analyst
Bernard Dahdah said, adding that the metal is likely to be
sensitive to outflows from bullion-backed exchange-traded funds.
Holdings of the world's largest gold ETF, New York-listed
SPDR Gold Shares , fell another 3.8 tonnes on Monday,
adding to the previous session's 4.7-tonne decline.
On the wider markets, the dollar edged up against a basket
of currencies. Comments by Trump administration trade adviser
Peter Navarro focussed attention on the White House's attitude
to trade and the dollar before G20 meetings this month.
The United States publishes trade balance figures on
Tuesday. Investors are also awaiting non-farm payrolls data for
February on Friday, seen as a key barometer of the U.S. economy.
China's gold reserves were unchanged for a fourth month in
February, the country's central bank said on Tuesday, the
longest stretch for which it has not added to its holdings since
it started updating the data monthly in mid 2015.
Silver was down 0.6 percent at $17.67 an ounce.
"Silver ETFs saw outflows of a good 73 tons yesterday –
their most pronounced daily outflow in nearly two months,"
Commerzbank said in a note. "Almost 94 tons of silver have been
withdrawn within the last three days of trading."
Platinum was down 0.4 percent at $971.25, after
earlier hitting $965.90, its lowest since Jan. 27, while
palladium was 0.1 percent higher at $771.75.
Source: Reuters
