By Arundhati Sarkar
(Reuters) – Gold prices slipped on Thursday to their lowest in more than a month, as the dollar and U.S. bond yields climbed after Federal Reserve Chair Jerome Powell indicated the central bank would stick with raising rates to tame soaring inflation.
Spot gold was down 0.7% at $1,624.15 per ounce by 1216 GMT, after hitting its lowest since Sept. 28 earlier. U.S. gold futures slipped 1.4% to $1,626.30.
“The sentiment… is clearly negative. In case of continued aggressive tightening, more sentiment-driven and dollar-driven selling remains the biggest risk for gold. Prices could undershoot,” said Julius Baer analyst Carsten Menke.
“Considering how bearish the mood in the gold and silver markets already is today, we believe that prices should remain rather rangebound in this scenario – that is between $1,650 and $1,600.”
The U.S. central bank raised interest rates by 75 basis points on Wednesday and signalled it might be nearing an inflection point.
Bullion prices rose as much as 1.3% after the release of the Fed policy statement. However, the metal ended the session 0.8% lower on Powell’s remarks.
Higher U.S. interest rates increase the opportunity cost of holding the non-yielding asset while boosting the dollar.
The dollar gained 1.4%, making gold more expensive for overseas investors. Benchmark U.S. 10-year Treasury yields also rose. [USD/] [US/]
“The Fed has hinted for slower rate hikes going forward, but terminal rate expectations have shifted higher. This would exert downward pressure on gold in the near term,” said ANZ commodity strategist Soni Kumari.
The Bank of England raised interest rates by 75 basis points to 3% in its biggest hike since 1989, as it warned of a “very challenging” outlook for the economy.
On the physical front, Australia’s Perth Mint reported a surge in the sales of gold products in October, while silver sales dipped.
Spot silver fell 1.3% to $19.03 per ounce, platinum shed 1% to $920.88, and palladium dropped 2.6% to $1,807.36.
(Reporting by Arundhati Sarkar and Eileen Soreng in Bengaluru; Editing by Shailesh Kuber, Vinay Dwivedi and Subhranshu Sahu)
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