Gold hits 2-week low as firm dollar, Fed taper timeline loom

  • 11/22/2021
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Nov 22 (Reuters) - Gold prices were near their lowest level in two weeks on Monday, constrained by a stronger dollar and expectations the U.S. Federal Reserve would accelerate the pace of stimulus tapering to curb broadening inflationary risks. Spot gold was down 0.2% at $1,841.36 per ounce, as of 0650 GMT. U.S. gold futures eased 0.3% to $1,845.20. The metal hit its lowest level since Nov. 10 earlier in the session, after comments from Fed Vice-Chair Richard Clarida suggested the central bank would table the idea of tapering its asset purchases in its upcoming December meeting. read more Higher rates generally translate into an increased opportunity cost of holding the metal, which pays no interest. "In the short- to medium-term, gold"s fundamentals look good because real (inflation-adjusted) yields are so negative, but eventually we"ll get tighter monetary policy and gold will trend lower in the bigger picture," IG Markets analyst Kyle Rodda said. "There"s also a growing sense that the United States and China are going to intervene to bring oil prices lower, one of the biggest drivers of inflation expectations, and this has weighed on gold"s momentum around its role as an inflation hedge." Further pressuring bullion was a stronger dollar index , which made bullion more expensive for holders of other currencies. But "with inflationary pressures reflecting only in short-dated (U.S. bond) rates, only more officials jumping on to a faster-taper narrative, or a sudden move higher in longer-term U.S. yields is likely to derail gold"s rally," Jeffrey Halley, senior market analyst at OANDA, said in a note. Halley said a move towards $2,000 in gold before the December Fed meeting can"t be ruled out. Also on investors" radar was 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 Spot silver rose 0.5% to $24.70 per ounce. Platinum was flat at $1,030.98 7 and palladium fell 0.9% to $2,042.95. Reporting by Nakul Iyer in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips

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