Gold falls to one-month low as Fed affirms rate-hiking stance
(Updates prices, adds comment)
* Gold set for worst week since mid August
* Dollar index holds near multi-month highs
* Silver on course for biggest drop since February
Nov 9 (Reuters) - Gold fell over 1 percent to a one-month
low on Friday as the U.S. dollar strengthened after the Federal
Reserve reaffirmed its monetary tightening stance, seen as a
negative for non-yielding bullion.
The Fed held interest rates steady on Thursday but is widely
expected to raise them in December, for a fourth time this year,
as it pointed to a healthy economy marred only by a dip in the
growth of business investment.
Spot gold was down 1.3 percent at $1,207.78 per ounce
at 13:30 a.m. EST (1830 GMT), having touched its lowest since
Oct. 11 at $1,206.13. It was on track to end the week 2 percent
lower, the steepest weekly decline since the week of Aug. 17.
U.S. gold futures settled down $16.5, or 1.35
percent, at $1,208.60.
"The Fed's announcement caused the dollar to strengthen and
the outlook for higher U.S. interest rates has gold on the
defense," said Bob Haberkorn, senior market strategist at RJO
Higher interest rates would be bullish for the dollar
because non-U.S. investors would rather convert their local
currencies to the greenback than buy gold, he said.
The dollar index of the greenback against six major
currencies climbed, setting its sights on a 16-month high hit on
The outlook for tighter credit was supported by an
unexpectedly big rise in U.S. producer prices in October, at the
fastest pace in six years.
"This number is a huge surprise and if this trend continues,
it should give the Fed ammunition for future rate hikes," Walter
Pehowich, executive vice president of investment services at
Dillon Gage Metals, said in a note.
Also weighing on overall commodity market sentiment was a
decline in oil prices, with benchmark Brent crude
falling to its lowest since early April.
"Gold is re-establishing its relationship with the crude oil
market," said Miguel Perez-Santalla, vice president of Heraeus
Metal Management in New York.
Gold can be used as a hedge against inflation fueled by
higher oil prices.
Investor sentiment in gold was reflected in holdings of SPDR
Gold, the biggest gold exchange traded fund, which had an
outflow of nearly four tonnes this week.
Silver fell about 1.7 percent to $14.16 per ounce,
after touching its lowest since Sept. 18. The metal was headed
for its worst week since February.
Platinum shed 1.3 percent to $853.30 an ounce, while
palladium fell nearly 0.7 percent to $1,116.
(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing
by Richard Chang)
First Published: 2018-11-09 03:32:16
Updated 2018-11-09 21:07:28
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