A five hundred gram gold bar, left, and a a one kilogram gold bar, produced by Swiss manufacturer Argor Hebaeus SA, in Budapest, Hungary.
Akos Stiller | Bloomberg | Getty Images
Gold prices fell to a new 2½-year low on Monday, weighed down by a sturdy dollar and prospects of further interest rate hikes by the U.S. Federal Reserve to bring down inflation.
Spot gold was down 0.3% at $1,638.59 per ounce, as of 0053 GMT, after hitting its lowest level since April 2020 earlier in the session.
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U.S. gold futures fell 0.6% to $1,645.8.
The dollar index scaled a fresh peak since 2002 buoyed by a hawkish Fed, making the greenback-priced bullion more expensive for buyers holding other currencies.
Higher interest rates dull bullion’s appeal since the metal yields no interest. Gold prices have fallen more than 20% since scaling above the key $2,000 per-ounce mark in March.
Atlanta Fed President Raphael Bostic said on Sunday he still believes the U.S. central bank can tame inflation without substantial job losses given the economy’s continued momentum.
A downturn in business activity across the euro zone deepened in September, according to a survey which showed the economy was likely entering a recession as consumers rein in spending amid a cost of living crisis.
Gold premiums in top consumer China climbed last week, helped by strong demand for bullion, while prices in India traded at a discount for the first time in four weeks due to an uptick in domestic rates.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.31% to 947.23 tons on Friday.
Read More: Gold hits 2½-year low as dollar stands tall