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PRECIOUS-Spot gold hits 3-week low on dollar, U.S. rate hike comments

Published 24/03/2016, 12:33 am
© Reuters.  PRECIOUS-Spot gold hits 3-week low on dollar, U.S. rate hike comments
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By Clara Denina

LONDON, March 23 (Reuters) - Spot gold fell more than two percent to its lowest in three weeks on Wednesday as the dollar strengthened following hawkish comments by Federal Reserve officials on the path of U.S. interest rates.

Gold had risen 1.2 percent in the previous session, when investors sought "safe haven" assets after deadly bomb attacks on Brussels, before giving up its gains.

Spot gold XAU= slipped 2.3 percent to the lowest since Feb. 29 at $1,219.70 an ounce in earlier trade and was down 2.2 percent at $1,221 by 1322 GMT. Prices fell as investors booked profits ahead of the Easter break, which starts on Friday.

U.S. gold futures GCcv1 also fell 2.2 percent to $1221 an ounce.

Comments from U.S. Federal Reserve officials underpinned the dollar, which was up 0.5 percent against a basket of currencies.

Philadelphia Fed President Patrick Harker said the central bank should consider another hike as early as next month if the U.S. economy continues to improve, while Chicago Fed President Charles Evans also said he expects two more rate increases this year. Fed (officials) comments put a bit of pressure on the gold price but are unlikely to derail a more positive long-term sentiment towards the metal," ABN Amro Georgette Boele said.

"If there was a massive rate hike and a jump in the dollar, it would be very difficult for gold to move higher, but any rate increase will be gradual."

Higher interest rates increase holding costs of gold, which is a non-interest bearing asset.

Bullion has rallied 16 percent this year, regaining its role as a shelter for risk-averse investors, in the face of tumbling equities and fears of a global economic slowdown.

Venezuela exported about 443 million Swiss francs ($456 million) worth of gold to Switzerland in February, data showed on Tuesday, as the South American country's central bank carried out swaps to receive cash due to a biting economic crisis.

Switzerland became a net importer of platinum once again in February, data from the Swiss customs bureau showed on Tuesday, as shipments from major producer South Africa ticked up.

Silver XAG= fell 3.2 percent to $15.35 an ounce, platinum XPT= dropped 2.4 percent to $964.90 an ounce and palladium XPD= dipped 3 percent to $586.50 an ounce.

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