Gold set for worst month since September on Fed rate-hike prospects

Gold & Silver
image

By Asha Sistla

(Reuters) – Gold prices edged up on Monday even as expectations for interest rate hikes by the U.S. Federal Reserve put non-yielding bullion on track for its worst monthly performance since September, while palladium braced for its best month in 14 years.

Spot gold XAU= was up 0.3% to $1,796.76 per ounce by 12:04 p.m. EST (1704 GMT), and was headed for a loss of 1.7% for the month. U.S. gold futures GCv1 rose 0.6% to $1,797.90.

The dollar has risen against other currencies based on expectations of Fed rate hikes, while other central banks haven’t really started to move yet, which has created a problem for gold, said Bob Haberkorn, senior market strategist at RJO Futures.

The dollar index was set for a monthly gain, making greenback-priced bullion more expensive for holders of other currencies.

The reality of five Fed rate hikes possibly this year has spooked the gold market a little bit, and gold is competing with bonds since it doesn’t earn interest, Haberkorn added.

The Fed plans to raise rates in March on the assumption the economy will largely steer clear of fallout from the Omicron coronavirus variant and keep growing at a healthy clip. (Full Story)

Elsewhere, spot palladium rose 0.3% to $2,384.70 per ounce, with the auto-catalyst metal poised for a monthly gain of about 26%, its best performance since February 2008.

“Concerns about supply outages in Russia in the event of an escalation of the Ukraine crisis have supported palladium in recent weeks,” UBS analyst Giovanni Staunovo said.

“So far there has been no disruption to production and exports. Short-covering activity likely also helped, considering non-commercial accounts were net-short the white metal at the start of this year.”

Silver gained 0.1% to $22.44 an ounce and was set for more than a 3% decline in January.

Platinum gained 0.9% to $1,016.49, set for its best month since October.

(Reporting by Asha Sistla in Bengaluru; Editing by Sherry Jacob-Phillips)

Leave a Reply

Your email address will not be published. Required fields are marked *