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Rate hike rush pushes gold to longest monthly losing streak in 4 years

Spot gold fell 0.5% to $1,715.79 an ounce by 09:55 a.m. ET (1355 GMT). Bullion has lost about 3% so far in August, and was set for its fifth straight month of declines.

August 31, 2022 / 08:17 PM IST
Representative image

Representative image

Gold slipped on Wednesday en route to its longest run of monthly losses since 2018, pressured by aggressive rate hikes by major central banks across the world.

Spot gold fell 0.5% to $1,715.79 an ounce by 09:55 a.m. ET (1355 GMT). Bullion has lost about 3% so far in August, and was set for its fifth straight month of declines.

U.S. gold futures shed 0.6% to $1,726.70.

It's getting much more clearer that central banks are going to be aggressive with tightening due to unprecedented inflationary pressure, which is not good for gold, said Edward Moya, senior analyst with OANDA.

The U.S. Federal Reserve's Loretta Mester said the central bank would need to raise interest rates somewhat above 4% by early next year.

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Meanwhile, Euro zone inflation jumped to another record high and will soon hit double-digit territory, heralding a string of big rate hikes.

Gold is known as a safe investment during economic and geo-political upheaval. However, in a high-interest rate environment, investors may favour other interest-yielding assets.

Bullion's reaction as it approaches the key $1,700 level will demonstrate the amount of support that remains for the metal amid fears of a global recession and the Ukraine war, Kinesis Money analyst Rupert Rowling said in a note.

Investors also took stock of data that showed U.S. private payrolls increased by 132,000 jobs in August after rising 270,000 in July.

Spot silver fell 2.1% to $18.11 an ounce. It was down 11% this month and set for its biggest monthly drop since September 2020.

Platinum dipped 0.1% to $846.75. Palladium edged 0.6% lower to $2,075.81.

China's factory activity in the coming months is going to be key to industrial metal demand, OANDA's Moya added.
Reuters
first published: Aug 31, 2022 08:17 pm
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