Gold Extends Losses for Third Day as Sticky US Inflation and Hawkish Fed Remarks Fuel Rate Hike Bets.
Dubai: Gold prices fell for a third consecutive session on November 12, remaining below $4,000 an ounce as persistent US inflation and hawkish comments from Federal Reserve officials strengthened expectations of an interest-rate hike next month.
In the UAE, retail gold prices followed the global decline. The price of 24-karat gold fell Dh3.75 to Dh479.25 per gram, from Dh483 yesterday. 22-karat gold dropped Dh3.50 to Dh443.75, down from Dh447.25.
18-karat gold lost Dh2.75 to Dh364.75 per gram, compared with Dh367.50 a day earlier. The price of 14-karat gold fell Dh2.25 to Dh284.50, from Dh286.75.
Fed rate hike bets strengthen
Markets are now pricing in a quarter-point rate increase in December, with traders showing strong conviction that the Federal Reserve will raise borrowing costs. Some are even anticipating a possible half-point move.
Chicago Fed President Austan Goolsbee described October’s consumer inflation report as “borderline disturbing”, reinforcing expectations of tighter monetary policy.
Bond markets have reflected the shift. Two-year US Treasury yields, which track expectations for near-term interest-rate decisions, have risen 25 basis points this week. The dollar gauge also gained almost 1 per cent across Tuesday and Wednesday.
Both developments have weighed on gold. Higher interest rates make the non-yielding metal less attractive to investors, while a stronger dollar makes bullion more expensive for buyers using other currencies.
Tough road ahead for gold
Investors are now looking ahead to comments from Fed Governor Michael S. Barr and other central bank officials later on Thursday. Friday’s US Producer Price Index will also be watched for further clues about the Fed’s December decision.
Gold has struggled since briefly rebounding above $4,100 an ounce late last month. The recovery, supported by falling oil prices and a cautious rebound in equities, proved short-lived.
Spot gold was trading 0.82 per cent lower at $3,959.59 an ounce at 11.30am Dubai time. The metal had fallen by more than 1 per cent in the previous session.
Silver slipped 1.66 per cent to $51.14 an ounce, while platinum and palladium edged higher. The Bloomberg Dollar Spot Index was unchanged.
