Gold products are pictured on display at Korea Gold Exchange in Seoul, South Korea, August 6, 2020. REUTERS/Kim Hong-Ji
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- Gold down more than 3% from Tuesday’s 10-week high
- U.S. economic growth in 2021 strongest since 1984
- Dollar index soars to highest level since July 2020
- Silver drops for 5th straight session, down more than 3%
Jan 28 (Reuters) – Gold prices slid over 1% to more than a two-week low on Thursday, as the dollar rallied after robust U.S. economic data strengthened the case for an interest rate hike by the Federal Reserve in March.
Spot gold was down 1.3% at $1,794.30 an ounce by 14:04 EST (1904 GMT), after hitting a low of $1,790.20. U.S. gold futures fell 2% to $1,793.10.
The drop in gold prices is a continuation of Wednesday’s selloff as markets further digest Fed Chair Jerome Powell’s comments on raising rates, said Philip Streible, chief market strategist at Blue Line Futures in Chicago. read more
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U.S. economic growth accelerated in the fourth quarter to post its best performance in nearly four decades in 2021. read more
Further hurting safe-haven gold’s appeal for overseas buyers, the dollar (.DXY) soared to its highest levels since July 2020.
Gold prices will drift lower in 2022 and 2023 as central banks raise interest rates, lifting bond yields and making non-yielding bullion less attractive, a Reuters poll showed.
Bullion has declined more than 3% since hitting its highest price in 10 weeks on Tuesday on the back of safe-haven buying driven by Russia-Ukraine tensions. read more
“Any rebound not backed by safe-haven seekers should thus run into resistance sooner or later as long as the economy is in recovery mode,” Julius Baer analyst Carsten Menke wrote in a note.
Menke added that he did not see a broad-based move into gold from safe-haven seekers but rather some selective buying which should remain the case as long as the economic backdrop does not sharply deteriorate.
Spot silver dropped 3.3% to $22.71 an ounce, and was set for its for biggest one-day decline since the end of September.
Platinum fell 0.9% to $1,022.15 an ounce and palladium gained for the eighth straight session, rising 1.9% to $2,372.20.
A Reuters survey showed that palladium prices are expected to gradually fall as automakers switch to using platinum in autocatalysts to cut costs.
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Reporting by Kavya Guduru in Bengaluru, additional reporting by Swati Verma; Editing by Devika Syamnath, Paul Simao and Vinay Dwivedi
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