Gold prices slipped on Thursday as the dollar hit a new two-decade high after US inflation data for April reinforced expectations that the Federal Reserve will stick to its aggressive rate hike roadmap. interest.
At 11:11 GMT, the Spot gold fell 0.37% to $1,845.18 per ounce.. US gold futures were down 0.2% at $1,849.20.
“We would expect gold to be supported in a higher inflation environment… The dollar has gained quite a bit since the CPI release and that is holding gold back,” WisdomTree analyst Nitesh Shah said.
The dollar index hit new two-decade highs as concerns that tighter monetary policies to curb rising inflation would hurt the global economy curbed risk appetite and led investors to take refuge in the currency.
Gold is highly sensitive to rising US rates and rising bond yields, which increase the opportunity cost of holding non-interest-bearing bullion, and also tend to boost the dollar, the currency in which price gold. However, it is considered a safe store of value during economic and political crises.
Gold’s declines were capped, however, by the decline in the 10-year US Treasury yield, which hit its lowest level in two weeks.
In other precious metals, spot silver fell more than 3% to $20.74 an ounce; platinum was down 2.6% at $966.21; and palladium was down 3.2% at $1,969.85.