Gold faces longest monthly losing streak since 2018 on rate hikes

Gold prices fell on Wednesday and were on track to post their longest streak of monthly losses since 2018 as traders anticipated more interest rate increases by central banks to combat red-hot inflation.

Spot gold fell 0.8% to $1,710.70 an ounce by 0956 GMT. Bullion has lost about 3% so far in August, set for its fifth straight month of declines.

U.S. gold futures dipped 0.8% to $1,722.90.

Expect gold to fall to $1,600 by year-end as Federal Reserve chair Jerome Powell’s determination to bring down inflation through tighter monetary policy will result in higher U.S. real rates and a stronger dollar, said UBS analyst Giovanni Staunovo.

Inflation has hit multi-decade highs in many parts of the world, forcing central banks to tighten monetary policy. Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.

“The Fed does not have intentions to significantly ease in the near term,” said DailyFX currency strategist Ilya Spivak. “Their focus is on inflation.”

Traders will look at the U.S. private payrolls report due at 1215 GMT for further clues on the resilience of the American labour market.

“(But) don’t expect the data to materially affect the direction of the gold price, although a strong number could drive it lower,” said Michael Hewson, chief market analyst at CMC Markets UK.

Spot silver fell 2.5% to $18.03 an ounce and was set for its biggest monthly drop since September 2020.

Platinum slipped 0.7% to $841.40 and was headed for a more than 6% drop over the month.

Palladium, meanwhile, dipped 0.4% to $2,078.81.

(Reporting by Arundhati Sarkar and Eileen Soreng in Bengaluru; Editing by David Goodman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor