Stronger dollar takes shine off gold as markets await news on interest rates

Bengaluru — Gold prices slipped on Thursday, weighed down by a stronger dollar, while cautious investors awaited comments from US Federal Reserve chair Jerome Powell and interest rate decision by the European Central Bank later in the day.

Spot gold fell 0.2% to $1,714.99/oz by 4.03am GMT, after rising nearly 1% on Wednesday. US gold futures inched 0.1% lower to $1,725.50. The dollar index was steady near a two-decade high touched in the previous session.

“A lot of eyes are glued to what Powell will say tonight and whether there’s any view on what the Fed will do at the end of the month,” said Brian Lan, MD at Singapore-based dealer GoldSilver Central. Gold hasn’t really regained its shine as a safe haven, with liquidations seen in exchange traded funds (ETFs), and many investors are on the sidelines because of the Fed raising interest rates, Lan added.

Powell will participate in a discussion at Cato Institute conference later in the day, which could be his final public comments before the September 20-21 policy meeting. Fed officials said on Wednesday they are still not convinced the worst of the US inflation scare has passed, hinting at continuation of the central bank’s aggressive rate hikes.

The Fed is expected to lift its policy rate by another 50 or 75 basis points in September. Investors were also expecting a hefty rate increase from the European Central Bank to combat soaring inflation at its policy decision at 12.15pm GMT, followed by president Christine Lagarde’s news conference at 12.45pm GMT.

Spot silver fell 0.3% to $18.45/oz, platinum was down 0.5% at $861.94 and palladium eased 0.2% to $2,039.17.