Gold price sinks to three-week low on expectations of a Fed interest-rate rise
London (Mar 7) Gold hit a three-week low on Tuesday, burdened by talk of a US interest rate rise this month.
But moves were muted as markets awaited US figures this week and more pointers on the Trump administration’s economic plans.
The metal’s price fell in five of the past six sessions as expectations for the Federal Reserve to push ahead with a US rate rise this month ramped up.
Spot gold was down 0.2% at $1,223.73 an ounce at 10.30am GMT, having earlier touched its lowest since February 15 at $1,222.29 an ounce. US gold futures for April delivery were down $1.80 an ounce at $1,223.70.
The metal slipped last week after US Federal Reserve chairwoman Janet Yellen saying the Fed was poised to lift benchmark US rates was seen as cementing plans for an increase at the Fed’s March 14-15 meeting.
Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding nonyielding bullion while boosting the dollar in which it is priced.
"We’re now expecting seven rate hikes for 2017-18, and I think that will put more pressure on gold," said Natixis analyst Bernard Dahdah. |He said the metal was 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 overnight by Trump administration trade adviser Peter Navarro pulled attention back to concerns over the White House’s attitude to trade and the dollar, as officials prepare for G20 meetings later this month.
The US publishes trade balance figures on Tuesday, which will be closely watched, analysts said. They are also awaiting nonfarm payrolls data for February on Friday, seen as a key barometer of the health of the US 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 0.5% at $17.70 an ounce. "Silver ETFs saw outflows of a good 73 tons yesterday, their most pronounced daily outflow in nearly two months," said Commerzbank. "Almost 94 tons of silver have been withdrawn within the last three days of trading."
Platinum was down 0.2% at $972.80, after earlier hitting $965.90, its lowest since January 27 and palladium was 0.2% lower at $769.45.
Source: Reuters
