LONDON: Gold fell on Wednesday as the dollar gained after comments from US Federal Reserve officials raised expectations of an interest rate hike in March and overshadowed President Donald Trump’s first major policy speech to Congress.
The probability of a March rate hike jumped to 67.5 per cent from roughly 30pc after the Tuesday comments from Fed officials, according to Thomson Reuters data.
“Rate rises are now priced in to futures but not in to gold, so the risk is to the downside (for gold),” said Mitsubishi analyst Jonathan Butler. Rising US interest rates increase the opportunity cost of holding non-yielding gold, while boosting the dollar.
Spot gold dropped 0.6pc to $1,241.50 an ounce by 1524 GMT, heading for a third straight day of losses. The metal hit its highest since Nov 11 at $1,263.80 on Feb. 27. US gold futures fell 1pc to $1,241.80.
Data on Wednesday showed US consumer price inflation jumped in January by 0.4pc.
Spot silver edged up 0.1pc to $18.33 an ounce, platinum fell 0.7pc to $1,012.74 and palladium gained 0.7pc to $772.15.
Published in Dawn, March 2nd, 2017