Gold price falls on nervousness before US rate hike and dollar strength

Gold prices fell more than 1% on Monday to their lowest level in four weeks, as prospects for an aggressive tightening of monetary policy by the US Federal Reserve and a strengthening dollar dented the price. attractive gold metal.

By 1127 GMT, spot gold was down 1% to $1,909.6 per ounce, having hit a low not seen since March 29 at $1,904.4. US gold futures were down 1.3% at $1,908.9.

“It looks like rate hike fears have taken over lately,” Julius Baer analyst Carsten Menke said.

With expectations of a half percentage point hike in interest rates at the Federal Reserve’s May meeting, traders bet on Friday that the US central bank will raise rates further in coming months to curb the rising inflation.

Gold is highly sensitive to rising US interest rates and rising Treasury yields, which raise the opportunity cost of holding bullion while boosting the dollar, the currency in which quote. However, it is considered a safe store of value during economic and political crises.

“We have a three-month target of $1,850,” Menke said, adding that “we have been of the view that gold is quite expensive as a safe-haven asset… We would think inflation pressures are about to recede. And that should take away some of the safe haven demand we’ve seen for gold.”

The dollar rose to a level last seen in March 2020, making gold more expensive for holders of other currencies.

Among other precious metals, palladium fell 3.4% to $2,293.33 an ounce, while platinum fell 2% to $911.69, after hitting its lowest level since December 2021. Silver fell 2.2% to US $23.60 an ounce, after hitting a low of more than two months.