BULLION LATEST 21/09: Gold slides on stronger dollar, hawkish Fed

The spot gold price declined during Asian morning trading on Thursday September 21, as a stronger dollar and the increasing likelihood of another US Federal Reserve interest rate increase this year curbed investors’ appetite for the yellow metal.

The spot gold price was quoted at $1,299.40-1,299.80 per oz as of 04:11 GMT, down $1.55. Trade has ranged from $1,295.95-1,301.45 so far today.

  • On Wednesday, the Fed left interest rates unchanged – as was widely expected – but hawkish language from the central bank, seemingly pointing to another rate increase this year, sent the dollar higher.
  • Markets had thought that the recent softness in US core inflation may have persuaded the Fed to hold off raising rates again this year – but it does not seem it will, ANZ Research noted.
  • “The Fed did not surprise, but the underlying signal was more hawkish than markets expected, shooting the dollar higher,” it added.
  • The dollar index was recently up 0.14% at 92.58.
  • “With the prospect of higher US interest rates and in the absence of any geopolitical volatility, profit-taking continued in gold,” Jeffrey Halley, senior market analyst at Oanda, said.
  • “The longer-term support region here at $1,296-1,300 should continue to remain under pressure today in Asia as traders readjust their Fed forecasts,” Halley added.

Silver, PGMs

  • In the other precious metals, the spot silver price dipped $0.023 to $17.060-17.125 per oz.
  • Platinum increased $2 to $939.0-944.0 per oz, and palladium went up $6 to $915.0-920.0 per oz.
  • On the Shanghai Futures Exchange, gold for December delivery was recently at 278.50 yuan ($42.30) per gram, while the December silver was at 3,887 yuan per kg.

Currency moves and data releases

  • The dollar index was recently up 0.14% at 92.58.
  • In other commodities, the Brent crude oil spot price was down 0.3% to $56.12 per barrel, and the Texas light sweet crude oil spot price edged 0.02% higher to $50.70.
  • In equities, the Shanghai Composite was up 0.14% to 3,370.84.
  • In data on Wednesday, US existing home sales for August disappointed at 5.35 million, below the forecast of 5.46 million.
  • Later today, we have the European Central Bank’s (ECB) economic bulletin, UK public sector net borrowing, EU consumer confidence as well as US data that includes unemployment claims, the Philly Fed manufacturing index, house price index and the CB leading index.
  • In addition, ECB president Mario Draghi is speaking.