Gold prices ease as Fed signals quicker-than-expected rate hikes

Thursday,   23-Sep-2021   08:57 AM (IST)

Gold prices dipped on Thursday after the U.S. Federal Reserve signalled easing its monthly bond purchases by next year and a sooner-than-expected interest rate hike, which could increase the opportunity cost of holding the non-yielding bullion. Spot gold was down 0.3% at $1,762.33 per ounce, as of 0122 GMT, while U.S. gold futures slipped 0.9% to $1,762.10. In its policy statement on Wednesday, the U.S. central bank said it could start paring bond purchases as soon as November and that half of the Fed officials were ready to raise interest rates next year in response to inflation. Gold is often considered a hedge against higher inflation, but a Fed rate hike would dull bullion’s appeal. The dollar index hit a one-month high, diminishing gold’s appeal for those holding other currencies. Fears of imminent contagion from China Evergrande’s debt crisis were temporarily soothed on Wednesday after the property developer agreed to settle interest payments on a domestic bond, while the Chinese central bank injected cash into the banking system. Russia produced 173.99 tonnes of gold between January and July, down from the 176.30 tonnes it produced in the same period in 2020, the finance ministry said on Wednesday. Silver fell 0.5% to $22.55 per ounce. Palladium eased 0.1% to $2,020.96, but prices rose 6.2% on Wednesday, their biggest one-day gain since March 2020. Platinum dropped 0.4% to $993.13.