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Gold prices at a nearly one-week low
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U.S. dollar gains
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Gold vulnerable to a move down to $1,900/oz -analyst
(Adds graphic, updates prices)
By Kavya Guduru
April 3 (Reuters) - Gold prices slid on Monday after a
surprise announcement from OPEC+ about a cut to oil output
sparked inflation concerns and raised bets of an interest rate
hike at the U.S. Federal Reserve's upcoming May meeting.
Spot gold was down 0.6% at $1,956.89 per ounce, as of
0709 GMT, its lowest in nearly a week. U.S. gold futures shed 0.7% to $1,971.30.
The opportunity cost of holding non-yielding bullion rises
when interest rates are increased to lower inflation.
Gold has fallen "as investors weigh up the lure of gold as a
safe-haven asset, versus the potential for higher-for-longer
interest rates. Clearly, fears of inflation and higher interest
rates has won the argument," said Matt Simpson, senior market
analyst at City Index.
Oil prices surged after Saudi Arabia and other OPEC+ oil
producers announced a round of output cuts, a potentially
ominous sign for global inflation just days after a slowdown in
U.S. price data had boosted market optimism. U.S. consumer spending rose moderately in February and
showed signs of cooling, even though it remained elevated.
"Gold is now vulnerable to a move down to $1,900, given the
potential for a higher terminal Fed rate that markets are
currently pricing in," Simpson added.
Markets now see a 60.9% chance of the Fed hiking rates by a
quarter point in May which, in turn, has lifted the U.S. dollar and Treasury yields. ANZ, in a note, observed gold's "safe-haven demand easing as
the U.S. banking turmoil eased."
Bullion had risen by nearly 8% last quarter after the recent
global banking turmoil drove bets that the Fed would tone down
its rate hike approach.
Standard Chartered analyst Suki Cooper said in a note that
gold buying by central banks might "not be as strong as it was
in 2022."
Spot silver slipped 1.6% to $23.69 per ounce,
platinum lost 0.5% to $986.83, and palladium fell
0.4% to $1,455.16.
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(Reporting by Kavya Guduru in Bengaluru; editing by Janane
Venkatraman and Jason Neely)
