BENGALURU: Gold prices slipped to a two-month low on Tuesday and were on track for their biggest monthly decline since June 2021, pressured by a stronger dollar and prospects of more rate hikes from the US Federal Reserve, according to Reuters.
Spot gold was down 0.4 percent at $1,809.90 by 1124 GMT, having earlier hit its lowest since late December at $1,804.20. US gold futures slipped 0.5 percent to $1,816.30.
Prices touched their highest since April 2022 in early February, but soon reversed course. Bullion has fallen more than 6 percent so far this month after strong economic data showed signs of a resilient US economy, adding to worries of more rate hikes by the US central bank.
Gold is having a negative month as the market is expecting interest rates to remain higher for longer, said Carlo Alberto De Casa, external analyst at Kinesis Money, adding: “If inflation continues to rise, then gold might fall to the $1,730-$1,740 range.”
Fed Governor Philip Jefferson said on Monday that he was under “no illusion” that inflation would return quickly to the US central bank’s target.
Although gold is considered an inflation hedge, rising interest rates increase the opportunity cost of holding the non-yielding asset.
Gold is moving closer to a very interesting area of support between $1,780 and $1,800, but economic data may determine how firm a support zone it will be, Craig Erlam, senior market analyst at OANDA, said in a note.
“How it reacts to this level could give a strong indication of sentiment in the markets at this time.”
The dollar index was headed for a monthly rise, making greenback-priced gold less attractive for other currency holders.
Spot silver fell 0.4 percent to $20.54 per ounce on the day and was set for its second straight monthly fall.
Platinum edged up 0.1 percent to $939.65 and palladium was flat at $1,430.73. Both metals were set to post a drop in prices for the month.
