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Gold prices hit near one-year low on strong dollar; Spot gold reaches $1,693.90 per ounce

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Gold prices fell on Thursday to their lowest in nearly a year, as an elevated US dollar and prospects of more interest rate hikes by major central banks to combat soaring inflation weighed on bullion’s appeal.

FUNDAMENTALS

* Spot gold was down 0.2% at $1,693.90 per ounce by 0052 GMT, after falling to its lowest since early August 2021 at $1,691.40 in early Asian trade.

* US gold futures fell 0.5% to $1,692.10 per ounce. 

* The dollar held below two-decade highs against its rivals, making greenback-priced bullion more expensive for buyers holding other currencies. 

* The European Central Bank will raise interest rates for the first time in 11 years on Thursday with a bigger-than-flagged move seen as increasingly likely as policymakers fear losing control of runaway consumer price growth.

* The US Federal Reserve is widely expected to raise interest rates by 75 basis points at its policy meeting next week.

* British inflation in June surged to a 40-year peak, bolstering chances of a half-percentage-point Bank of England rate hike next month. 

* Although gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding bullion, which pays no interest.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.3% to 1,005.87 tonnes on Wednesday from 1,009.06 tonnes on Tuesday. 

* European Union diplomats meeting in Brussels on Wednesday agreed a new round of sanctions against Moscow for invading Ukraine, including a ban on importing gold from Russia. 

* Spot silver was flat at $18.66 per ounce, platinum eased 0.2% to $856.12, and palladium rose 0.2% to $1,864.83.

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