Written by Kavya Jodoro
(Reuters) – Gold prices fell as much as 2% on Thursday to a one-week low as the dollar strengthened after the US Federal Reserve announced a longer-term interest rate hike.
* As of 1635 GMT, spot gold was down 1.7%, at $1,777.45 an ounce, while US gold futures were down 1.8%, at $1,786.40.
* “The Fed is keeping its hawkish messages for now, despite lower growth prospects, and in turn, without a rating downgrade in sight, it will be very difficult for speculators to move their capital towards gold,” said Daniel Ghaly, commodity strategist at TD Securities. .
* The Federal Reserve raised interest rates by half a percentage point on Wednesday, as the market had expected, but gold fell to 0.8% after US central bank chief Jerome Powell’s comments that the Fed expects interest rates to remain high for longer.
“Inflation data received so far in October and November shows a welcome slowdown in the pace of price increases, but significantly more evidence will be needed to give confidence that inflation is on a sustainable downward trajectory,” Powell said.
* Gold has traditionally been seen as a hedge against inflation, but higher rates reduce the attractiveness of bullion by increasing the opportunity cost of holding non-interest-bearing currency.
– The European Central Bank and the Bank of England also raised interest rates by half a percentage point on Thursday, signaling the possibility of further increases.
– The dollar rose 0.99% against a basket of six major currencies, making gold more expensive for holders of other currencies.
* Among other precious metals, the euro fell 3.4% to $23.08 an ounce. lost 2.3% to $1005; It fell 4.4% to $1,831.63.
(Reporting by Kavia Godoro in Bengaluru; Editing in Spanish by Carlos Serrano and Ricardo Figueroa)
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