Gold slides to three-and-a-half-month low amid Fed hike expectations
Spot gold fell to its lowest level since mid-July, dropping about 1% to $3,980 per ounce, as stronger US GDP data and rising oil prices fuel expectations of further interest-rate hikes.
Spot gold slipped 1% to $3,980.40 per ounce by 1107 GMT on Friday, marking its lowest price since July 17 and setting up a second consecutive monthly decline. US gold futures for December delivery also fell 1% to $3,991.10 per ounce, while the metal has dropped 4.3% so far this month.
"Gold prices are affected by a combination of two factors, the US GDP data, which came in stronger than expected, and the increase in oil prices putting pressure on the Fed to hike further interest rates," said Giovanni Staunovo, a UBS analyst.
US gross domestic product grew faster than forecast in the latest quarter, and September inflation rose as gasoline and other consumer prices increased, reinforcing market expectations of a December rate hike. Staunovo added that gold could rise to $5,000 or higher next year if the Fed eventually cuts rates and inflation eases.
Major central banks paused rate hikes this week but signaled that tightening is not over, with the Federal Reserve and the European Central Bank keeping rates steady while warning of inflation risks from higher energy costs. Oil prices climbed, driven in part by a tanker attack in the Strait of Hormuz that highlighted ongoing supply concerns linked to the US-Israeli conflict with Iran. Higher energy prices bolster expectations of a prolonged period of elevated interest rates, reducing the appeal of non-yielding assets such as gold.
In related market moves, spot silver fell 3.6% to $50.50 per ounce, platinum dropped 3% to $1,443.69, and palladium slipped 2.5% to $981.31, with all three metals poised for weekly and monthly declines.
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