Gold prices inched lower on Thursday, as a firmer dollar and expectations of big interest rate hikes from the U.S. Federal Reserve diminished the metal’s appeal. FUNDAMENTALS Spot gold fell 0.1% to $1,693.81 per ounce, as of 0110 GMT. U.S. gold futures were down 0.3% at $1,704.4. The dollar index edged 0.1% higher towards recent peaks, making gold expensive for buyers holding other currencies.
Expectations of a more hawkish Fed are pushing some investors to revise how much further bond yields can rise. Gold is highly sensitive to rising U.S. interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar. U.S. producer prices fell for a second straight month in August as the cost of gasoline declined further, resulting in the smallest annual increase in a year, which could allay fears of inflation becoming entrenched.
Central bankers must be persistent in fighting broad-based inflation, International Monetary Fund chief Kristalina Georgieva said on Wednesday. Holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, fell 0.24% to 960.56 tonnes on Wednesday from 962.88 tonnes on Tuesday. Spot silver dipped 0.6% to $19.57 per ounce. Platinum fell 0.4% to $902.50 and palladium was flat at $2,163.43. DATA/EVENTS (GMT) 0430 Japan Tertiary Ind Act NSA Jul 0645 France CPI (EU Norm) Final Aug 0900 EU Total Trade Balance SA Jul 1100 EU Reserve Assets Total Aug 1200 UK GB BOE QE Corp Sep 1230 US Import Prices YY Aug 1230 US Initial Jobless Clm Weekly 1230 US Philly Fed Business Indx Sep 1230 US Retail Sales MM Aug 1315 US Industrial Production MM Aug