Gold slips as dollar firms amid Fed rate hike view - Highlight Investment Research

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Monday 1 October 2018

Gold slips as dollar firms amid Fed rate hike view

Gold prices dipped on Monday as the dollar firmed in the wake of indications from the U.S. Federal Reserve last week that it will pursue a tighter monetary policy.
The Fed raised U.S. interest rates last week and said it planned four more increases by the end of 2019 and another in 2020, amid steady economic growth and a strong job market.
Higher U.S. interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
Spot gold was down 0.3 percent at $1,188.41 at 0407 GMT. On Friday, gold touched its lowest since Aug. 17 at $1,180.34 an ounce.
U.S. gold futures were down 0.3 percent at $1,192.30 an ounce.

"Gold prices remain dependent on the dollar prices at this juncture. The U.S. economy has been rosy and better than expected. Efforts by the Trump administration to reduce the trade deficit from an economic point of view has been friendly for the greenback as well," OCBC analyst Barnabas Gan said.
Gold prices are likely to see lower volatility, with the Chinese markets closed for a week, for the Golden Week celebration, Gan said.
The dollar index was up 0.1 percent versus a basket of major currencies, and hovered close to a near three-week high hit in the previous session.

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