Gold Dips Below $ 1,800 in Dollars, Yields Firm on Rate Hike Bets

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  • Dollar index hits new 16-month high
  • Jerome Powell appointed Fed chairman
  • Market expectations for the 2022 rate hike are strengthening

Nov 23 (Reuters) – Gold fell below $ 1,800 on Tuesday as the dollar hit 16-month highs and Treasury yields firmed, expectations of an interest rate hike Americans next year being bolstered by the re-appointment of Federal Reserve Chairman Jerome Powell.

Spot gold fell 0.4% to $ 1,797.16 an ounce at 10:22 a.m. GMT, while US gold futures fell 0.5% to 1,797.70 $.

The dollar index hit a new 16-month high and US Treasury yields firmed after Powell was appointed to a second term as Fed chairman, adding to confidence that the US central bank will pick up the slack. interest rate in 2022. read more

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While gold is seen as a hedge against inflation and other uncertainties, a likely rate hike to curb rising consumer prices would increase the opportunity cost of holding unproductive bullion.

But it is “too early to write off the gold,” said Ross Norman, an independent analyst.

“Inflation still has a way to go and there are COVID-19 related restrictions in Europe again. But the onus is on the bulls to prove their case and garner support or else the metal could drop again.” Norman added.

The increase in COVID-19 cases in parts of Europe, which has resulted in restrictions, has kept investors on edge. Read more

The fall in gold was a knee-jerk reaction to the dollar, said Stephen Innes, managing partner of SPI Asset Management. The strength of the US dollar decreases the attractiveness of the metal to foreign buyers.

“There will not be a sudden change in hawkishness due to the appointment, but a continuation of the current policy with a faster cut presented by officials last week,” Innes added. Read more

Elsewhere, spot silver fell 1.1% to $ 23.89 an ounce, platinum fell 0.8% to $ 1,003.59, and palladium fell 0.4% to 1,946 , $ 38.

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Reporting by Arundhati Sarkar and Nakul Iyer in Bangalore; Editing by Jan Harvey

Our Standards: Thomson Reuters Trust Principles.


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