Gold extends fall on stronger dollar, Fed rate-hike worries

Aug 16, 202201:17 UTC

GOLD

DXY

GLD

XAGUSD1!

Gold prices inched lower on Tuesday after falling more than 1% in the previous session, weighed down by an uptick in the U.S. dollar and worries over further U.S. interest rate hikes.

FUNDAMENTALS

* Spot gold GOLD was down 0.1% at $1,777.46 per ounce, as of 0054 GMT, after hitting its lowest since Aug. 8 at $1,772.30 on Monday.

* U.S. gold futures GOLD eased 0.2% to $1,793.90 per ounce.

* The dollar DXY rose 0.1% to a more than one-week high against its rivals, making gold more expensive for buyers holding other currencies.

* U.S. single-family homebuilders' confidence and New York state factory activity fell in August to their lowest levels since near the start of the COVID-19 pandemic, a further sign the economy is softening as the Federal Reserve raises interest rates.

* Fed officials have maintained a hawkish tone and hinted at more rate hikes down the year to tame high inflation.

* Although gold is seen as a hedge against inflation, rising U.S. interest rates dull non-yielding bullion's appeal.

* Investors now await minutes from the Fed's July meeting on Wednesday for clues on further rate hikes.

* Traders were pricing in around a 36.5% chance of a 75-basis-point rate hike by the Fed in September and a 63.5% chance of a 50 bps increase. (FEDWATCH)

* SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 993.94 tonnes on Monday from 995.97 tonnes on Friday.

* Spot silver XAGUSD1! slipped 0.2% to $20.21 per ounce, platinum PL1! fell 0.4% to $929.29, and palladium XPDUSD1! was steady at $2,144.52.