Gold pressured by stronger dollar, faster Fed taper bets

  • 11/22/2021
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Nov 22 (Reuters) - Gold eased on Monday, hovering near a two-week low, weighed down by a firmer dollar and expectations that rising inflation might push the Federal Reserve to accelerate its monetary policy tightening. Spot gold fell 0.2% to $1,841.20 per ounce by 1224 GMT, after hitting its lowest since Nov. 10 at $1,836.00. U.S. gold futures eased 0.6% to $1,841.30. "Gold has support from a surge in inflation ... but the market is slightly worried about how the Fed will deal with it and if they will step up their efforts, and that could be a short term drag on gold," said Saxo Bank analyst Ole Hansen. A break below $1,830 could open gold up to the risk of a return to $1,800, Hansen added. Fed policymakers are debating whether to withdraw support more quickly to deal with inflation, with one of its most influential officials signalling that the idea will be on the table at their December meeting. read more The U.S. economy"s resilience has also benefited the dollar and fuelled speculation the Fed might go faster with tapering, CMC Markets UK analyst Michael Hewson said in a note. A stronger dollar (.DXY) makes bullion expensive for overseas buyers, while higher rates translate into increased opportunity cost of holding non-yielding gold. Investors also kept tabs on U.S. President Joe Biden"s appointment of a new Fed Chair and the return of COVID-19 restrictions in parts of Europe. read more "And gold could see some recovery if Lael Brainard is named the next Fed chair as she is more towards the dovish side," said Xiao Fu, head of commodities markets strategy at Bank of China International. Elsewhere, spot silver rose 0.6% to $24.72 per ounce, platinum edged 0.2% higher to $1,033.13, while palladium fell 0.9% to $2,042.62. Reporting by Arundhati Sarkar in Bengaluru Editing by Mark Heinrich and David Evans

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