Gold set for biggest drop in 20 months on rate hike worries
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 U.S. Federal Reserve.
Spot gold was down 0.3% at $1,812.20 by 0918 GMT, having earlier hit its lowest since late December at $1,804.20. U.S. gold futures slipped 0.4% to $1,817.70.
Prices touched their highest since April 2022 in early February, but soon reversed course. Bullion has fallen more than 6% so far this month after strong economic data showed signs of a resilient U.S. economy, adding to worries of more rate hikes by the U.S. 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.
“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 U.S. central bank’s target.
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