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Gold has lost $150 since early-Feb
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Fed rates seen peaking at 5.397% in July
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U.S. dollar index near seven-week peak
(Adds details, updates prices)
By Kavya Guduru
Feb 27 (Reuters) - Gold prices slipped to a two-month
low on Monday, after strong U.S. economic data stoked fears that
the Federal Reserve would deliver more interest rate hikes to
bring down inflation.
Spot gold eased 0.1% to $1,809.89 per ounce, as of
0744 GMT. U.S. gold futures were unchanged at $1,816.30.
Data on Friday showed U.S. consumer spending shot up 1.8%
last month, the largest increase since March 2021, while the
personal consumption expenditures price index, the Fed's
preferred inflation measure, rose 0.6% after gaining 0.2% in
December.
"A two-year high consumer spending coupled with robust job
numbers released earlier this month would give confidence to the
Fed to boost rates to tackle inflation," said Hareesh V, head of
commodity research at Geojit Financial Services.
Higher interest rates increase the opportunity cost of
holding zero-yield bullion.
U.S. Treasury Secretary Janet Yellen told Reuters on
Saturday that new data showing inflation jumped unexpectedly in
January signalled the fight against inflation "is not a straight
line" and more work was needed.
"It's going to take more effort on the part of the Fed to
get inflation on that sustainable downward path to 2%,"
Cleveland Fed President Loretta Mester said on Friday.
Gold prices hit their highest since April 2022 earlier this
month, but have since lost about $150 after a slew of U.S. data
pointed to a resilient economy and a tight labour market.
Money markets expect the Fed's target rate to peak at 5.397%
in July from a current range of 4.50% to 4.75%. Gold may test a support of $1,816 per ounce, a break below
which could open the way to $1,793 range, said Reuters technical
analyst Wang Tao.
The dollar index was near a seven-week peak, making
bullion more expensive for overseas buyers. Spot silver lost 0.6% to $20.64 per ounce, platinum was little changed at $909.11, and palladium eased
0.1% to $1,402.63.
(Reporting by Kavya Guduru in Bengaluru; Editing by Rashmi Aich
and Subhranshu Sahu)
