Economic news

Gold Edges Up, Faces Pressure from U.S. Rate Hike Bets

* Holdings of SPDR Gold Trust fell on Tuesday

* Gold likely to be around $1,500/oz by end-2022 - analyst 

Sept 29 (Reuters) - Gold prices edged up on Wednesday as a slight dip in U.S. bond yields provided some support against growing expectations of quicker-than-expected U.S. interest rate hikes that also pushed the dollar to a multi-month high.

Spot gold rose 0.3% to $1,739.34 per ounce by 0548 GMT, having hit an over one-month trough on Tuesday.

U.S. gold futures edged 0.2% up to $1,740.20.

“What you’re seeing this morning is just a technical bounce ... There is a very little bullish case for gold right now,” said OCBC Bank economist Howie Lee.

“We see gold at around $1,500 by the end-2022, especially with tapering having completed its course by then and the Fed looking to start raising its interest rates.”

The dollar index hovered near a more than 10-month high, touched on Tuesday.

Though the benchmark U.S. 10-year Treasury yields eased off a bit, it held above 1.5%, a level last seen in June.

Higher yields raises the opportunity costs of holding non-interest bearing bullion.

St. Louis Federal Reserve President James Bullard on Tuesday cautioned high inflation may require more aggressive steps by the central bank, including two interest rate hikes in 2022.

In congressional testimony, Fed Chair Jerome Powell said the U.S. economy is still far from achieving maximum employment, a key component of the central bank’s requirements for raising interest rates.

Having broken through a support at $1,740, gold could test $1,700 this week if tapering repricing continues, Jeffrey Halley, a senior market analyst for Asia-Pacific at OANDA said in a note.

He added that some risk-hedging with Asian shares easing was supporting bullion.

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, slipped to 990.03 tonnes on Tuesday from the day before.

Silver rose 0.1% to $22.45 per ounce.

Platinum fell 0.2% to $965.58, while palladium gained 1.1% to $1,896.86. (Reporting by Eileen Soreng and Nakul Iyer in Bengaluru; Editing by Ramakrishnan M.)

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree