Gold lingers near 1-month low as prospects of more Fed rate hikes weigh

Gold languished near a one-month low on Wednesday and was set for a fifth consecutive monthly drop, as solid U.S. data and hawkish Federal Reserve comments pointing to higher interest rates dented the non-yielding metal’s appeal.

FUNDAMENTALS

* Spot gold was flat at $1,723.28 per ounce, as of 0109 GMT, trading close to a one-month trough hit on Monday. It has declined 2.5% so far in the month.

* U.S. gold futures fell 0.1% to $1,734.40.

* The influential chief of the New York Fed said on Tuesday the U.S. central bank will likely need to get its policy rate “somewhat above” 3.5% and keep it there through the end of 2023.

* Even though gold is seen as a hedge against inflation, rate hikes raise the opportunity cost of holding bullion.

* U.S. job openings increased in July and data for the prior month was revised sharply higher, pointing to persistently strong demand for labour that is giving the Fed cover to maintain its aggressive rate increases.

* Data also showed a bigger-than-expected rebound in U.S. consumer confidence in August.

* A chorus of European Central Bank policymakers called for decisive and swift rate hikes on Tuesday to combat soaring inflation, ahead of next week’s policy meeting.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.44% to 976.26 tonnes on Tuesday from 980.61 tonnes on Monday.

* The dollar index inched 0.1% lower, while benchmark 10-year yields were off two-month highs hit in the previous session. [USD/] [US/]

* Spot silver fell 0.5% to $18.40 per ounce, platinum rose 0.2% to $849.11 and palladium dipped 0.3% to $2,082.18.

DATA/EVENTS (GMT)

0130 China NBS Manufacturing PMI Aug

0645 France GDP QQ Final Q2

0645 France CPI (EU Norm) Prelim YY Aug

0645 France Producer Prices YY July

0755 Germany Unemployment Chg, Rate SA Aug

0900 EU HICP Flash YY Aug

0645 France HICP-X F&E Flash YY Aug

1200 India GDP Quarterly YY Q1