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Gold prices fall 1% as dollar jumps on hawkish Fed

Thursday,   22-Sep-2022   08:06 AM (IST)

Gold prices fell 1% on Thursday, as the dollar rose sharply after the U.S. Federal Reserve increased interest rates by another 75 basis points and flagged more hikes. Spot gold dropped 1% to $1,656.97 per ounce, as of 0114 GMT. U.S. gold futures fell 0.5% to $1,667.30. The dollar index scaled a new two-decade peak versus major peers, making bullion more expensive for buyers holding other currencies. Fed Chair Jerome Powell vowed on Wednesday that he and his fellow policymakers would "keep at" their battle to beat down inflation, as the U.S. central bank hiked interest rates by 75 basis points for a third straight time and signalled that borrowing costs would keep rising this year. Even though gold is seen as a hedge against inflation, rate hikes to tame inflation tend to raise the opportunity cost of holding zero-yield bullion. President Vladimir Putin ordered Russia's first wartime mobilisation since World War Two on Wednesday, shocking citizens with what Western countries described as an act of desperation in the face of a losing war. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.12% to 952.16 tonnes on Wednesday from 953.32 tonnes on Tuesday. Spot silver shed 1.7% to $19.26 per ounce, platinum fell 1.1% to $897.92 and palladium was down 0.8% at $2,138.51.