Gold down as Fed hints at more interest rate hikes

Gold prices fell by nearly 1 percent today, Thursday, after Jerome Powell, Chairman of the Federal Reserve (US Central Bank), said that next year will witness more interest rate hikes.

According to Reuters, spot gold fell 0.9 percent to $1,791.71 an ounce by 0724 GMT, further retreating from the more than five-month peak it recorded on Tuesday. US gold futures fell 0.9 percent, recording $ 1,802.10

Powell said on Wednesday that the US Central Bank will adopt more interest rate hikes next year, even though the US economy is sliding towards a possible recession, and he explained that the economy will incur a higher price if the Federal Reserve does not curb inflation strongly.

Christopher Wong, an analyst at OCBCFX, said that the central bank’s adherence to the tendency to tighten monetary policy is putting pressure on the metal, and that gold price expectations depend on the amount of tightening that central banks, especially the US central bank, intend to do from now on.

Gold is known as a hedge against inflation, but high interest rates tend to weaken its attractiveness because it increases the opportunity cost of holding the metal that does not yield a return.

The dollar index rose 0.1 percent. An increase in the dollar makes gold more expensive for buyers from abroad

As for other precious metals, silver fell 2.5 percent to $ 23.29 an ounce, platinum fell 1.6 percent to $ 1012.55, while palladium fell 0.6 percent to $ 1904.69.