2 Minutes Read (Adds analyst comments and updates prices) * The dollar index is hovering just below a two-month high* The Fed’s Barkin claims that significant progress has been achieved on the inflation target. * This week, gold is expected to resume its downward trend, according to analysts. Reuters, June 29 – Gold prices fell on Tuesday, hovering near a one-week low touched the day before, pulled down by a strong dollar and fears that the US Federal Reserve could tighten policy sooner than expected. By 0255 GMT, spot gold had down 0.2 percent to $1,775.49 per ounce, after hitting a low of $1,770.36 on Monday, the lowest since June 21. Gold futures in the United States declined 0.3 percent to $1,775.70. According to ED&F Man Capital Markets analyst Edward Meir, in the gold market, there was a lot of listless trade since some market participants were still confused about the Fed’s policy outlook. Despite a weaker-than-expected U.S. inflation estimate last week, several Fed policymakers have become more hawkish. According to Fed Bank of Richmond President Thomas Barkin, the Fed has achieved “significant more progress” toward its inflation goal, allowing it to begin decreasing asset purchases. The dollar’s value against its peers remained below a two-month high, making gold more expensive for holders of other currencies. “The dollar will start to fall again,” Meir said, “since the scenario on the rate (increase) front is clear for at least another 18 months to two years.” Although gold is viewed as an inflation hedge, a Fed rate hike will raise the opportunity cost of keeping bullion, reducing its appeal.” Gold has continued to trade below its 100-day moving average level, despite having recovered after a two-week selloff “In a statement, OCBC noted. “We expect gold to resume its downward trend this week as risk sentiment rises and markets focus on the possibility of the Fed tightening monetary policy.” Silver fell 0.4 percent to $25.99 per ounce, palladium 0.2 percent to $2,680.62 per ounce, and platinum 0.1 percent to $1,088.93 per ounce. (In Bengaluru, Sumita Layek reported; Subhranshu Sahu edited) Continue reading
