- Fed, BoC, and BoJ keep interest rates on hold amid inflation concerns
- ECB expected to hold interest rates steady
- Oil rises over $115 a barrel after Iran strikes Middle East energy facilities
March 19 (Reuters) - Gold prices fell to their lowest level in more than a month on Thursday, pressured by a stronger dollar and rising Treasury yields, while a hawkish U.S. Federal Reserve further dampened bullion's appeal.
Spot gold fell 2.2% to $4,710.88 per ounce as of 0920 GMT, its lowest since February 6.
U.S. gold futures for April delivery fell 3.6% to $4,721.40.
"Gold fell sharply for a second day after breaking key support below $5,000, amid a stronger dollar and a more hawkish tone from Fed Chair Jerome Powell following the latest FOMC meeting," said Ole Hansen, head of commodity strategy at Saxo Bank.
The dollar and benchmark 10‑year U.S. Treasury yields rose, making gold more expensive for holders of other currencies and diminishing the appeal of the non‑yielding metal.
Top central banks from the U.S., Canada and Japan struck hawkish tones on Wednesday, wary that rising energy prices could spark a fresh wave of inflation.
The European Central Bank is widely expected to keep interest rates on hold on Thursday, but will make clear it stands ready to raise them if the Iran war fuels a lasting surge in euro zone inflation.
While gold is traditionally seen as a hedge against inflation and uncertainty, high interest rates curb its appeal by raising the cost of holding bullion and boosting returns on yield-bearing assets.
Oil prices jumped above $115 per barrel after Iran attacked energy facilities across the Middle East following Israel's strike on its South Pars gas field, a major escalation in the war.
Rising oil prices can feed into inflation as businesses pass on higher costs, which could encourage the Fed to keep rates higher for longer.
"Geopolitical risks are going to linger and be a very strong catalyst for gold prices, so despite short-term consolidation, I could easily see gold at $6,000 by the end of the year," said Nitesh Shah, commodity strategist at WisdomTree.
Spot silver fell 4.8% to $71.74 per ounce. Spot platinum fell 3.6% to $1,949.45, and palladium lost 1.7% to $1,451.
Reporting by Pablo Sinha in Bengaluru; Editing by Ros Russell
Source: Reuters