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Gold hovers close to 10-week low on dollar advance – Metro US

Gold hovers close to 10-week low on dollar advance

An ingot of 99.99 percent pure gold is cast at
An ingot of 99.99 percent pure gold is cast at the Krastsvetmet non-ferrous metals plant in Krasnoyarsk

(Reuters) – Gold prices inched lower on Thursday, hovering close to a 10-week trough touched earlier, as a robust dollar overshadowed jitters over contraction in U.S. economic growth in the first quarter.

Spot gold was down 0.1% at $1,885.11 at 1620 GMT. It hit $1,871.81, its lowest level since Feb. 17 earlier in the session. U.S. gold futures eased 0.1% to $1,886.00.

“The gold prices were positive for a bit after the negative U.S. GDP number that initially sparked some ideas that maybe the Federal Reserve can’t be as aggressive on its monetary policy tightening,” said Kitco senior analyst Jim Wycoff.

“It has lately been more downside for gold as the U.S. dollar index hits highs and bond yields rise … The economy remains in pretty good shape and inflation needs to be brought under control.”

The U.S. economy unexpectedly contracted in the first quarter amid a resurgence in COVID-19 cases and a drop in pandemic relief money from the government, while domestic demand remained strong. Meanwhile, weekly jobless claims fell 5,000 to 180,000.

Gold has declined about 2.7% this month, which could be its biggest monthly fall since September, on expectations of an aggressive monetary policy tightening by the U.S. Federal Reserve and a stronger dollar.

The dollar index rallied on Thursday to its highest level since December 2002 amid widespread weakness in its major rivals.

“With the Fed seen hiking interest rate by 50 basis points and possibly 75 basis points in the next two meetings after the May 4, the dollar is going to remain in demand … It’s very difficult to be bullish on gold at the moment,” Fawad Razaqzada, market analyst at City Index, said.

Rapid rate hikes will increase the opportunity cost of holding non-yielding bullion.

In other metals, spot silver fell 1.4% to $22.97 per ounce, having hit its lowest level since Feb. 11.

Platinum slipped 0.6% to $911.87 per ounce and palladium gained 1.2% to $2,230.17.

(Reporting by Ashitha Shivaprasad and Eileen Soreng in Bengaluru; Editing by Matthew Lewis and David Evans)

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