Spot gold lost 1.6% to $1,865.46 per ounce, having reached its lowest since February 16, at $1,854.36. US gold futures fell 2.4% to $1,865.70.
“The gold market is under pressure from the strengthening dollar and yields, amid fears that the Federal Reserve may be more aggressive”said Phillip Streible of Blue Line Futures. “China’s economic activity with its factory data has bottomed out, which is also pulling the metals market down.”
Investors are awaiting the two-day meeting of the Federal Open Market Committee of the US central bank, which begins on Tuesday, May 3. Fed policymakers appear poised to make a series of aggressive rate hikes through at least the summer to fight rising inflation and soaring labor costs.
The yellow metal is often seen as a hedge against inflation, but rate hikes increase the opportunity cost of holding bullion, which pays no returns.
Chinese factory activity contracted in April as widespread COVID-19 lockdowns halted industrial production and disrupted supply chains.
The dollar hovered at 20-year highs on concerns about global growth and expectations of a tougher tone from the Fed. The yield on 10-year Treasuries also hit multi-year highs.
In other precious metals, Spot silver dipped 0.8% earlier in the session at $22.56 per ounce, the lowest since Feb. 4; palladium fell 4.1% to $2,225.19; and platinum rose 0.5% to $935.50.
Source: Ambito
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