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Gold down for second straight session
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Fed seen raising rates by 25 bps in May
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Platinum down 2%
(Adds details, updates prices)
By Kavya Guduru
April 24 (Reuters) - Gold prices edged lower on Monday
for a second consecutive session, as investor focus shifted to
central bank meetings for clarity on their rate-hike strategies
that may shed light on whether progress has been made in taming
inflation.
Spot gold was down 0.1% at $1,980.89 per ounce,
as of 0613 GMT. U.S. gold futures were flat at $1,990.20.
Gold is highly sensitive to rising interest rates, which
raise the opportunity cost of holding non-interest bearing
bullion.
The dollar firmed 0.1%, increasing gold's cost for
buyers holding other currencies. "Some firming in U.S. Treasury yields following last
Friday's flash PMI data are keeping the downward pressure on
gold prices," said Yeap Jun Rong, a market analyst at IG. Gold prices dropped by more than 1% on Friday after the
release of surveys that showed the U.S. and euro zone business
activity gathered pace in April.
The CME FedWatch tool shows that markets are pricing in an
88.6% chance of a 25-basis-point hike by the U.S. Federal
Reserve at its May 2-3 meeting.
"While the Fed's rate expectations have remained
well-anchored thus far, further resilience in economic
conditions over the coming weeks could brew speculations for
another rate hike in June or push back against the timeline of
rate cuts, which will be headwinds for the non-yielding yellow
metal," IG's Yeap said.
Fed Governor Lisa Cook said on Friday the outlook for the
next stage of central bank monetary policy has grown less clear
after the institution has taken appropriately aggressive steps
over the last year to lower price pressures.
Moreover, the European Central Bank is expected to hike
rates by a quarter percentage point on May 4, with some
likelihood for a half-point hike. The Bank of England is seen
raising rates to 4.5% on May 11.
In other precious metals, spot silver slipped 0.3% to
$24.95 per ounce, platinum shed 2.1% to $1,100.45 and
palladium dropped 1.1% to $1,583.94.
(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry
Jacob-Phillips)
