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PRECIOUS-Gold up, but headed for worst month in seven on U.S. rate hike bets

reuters.com · 04/28/2022 23:38
PRECIOUS-Gold up, but headed for worst month in seven on U.S. rate hike bets

U.S. economy unexpectedly contracts in the first quarter

Dollar near 20-year high

Silver, platinum also headed for monthly drops

Recasts, adds comments and details, updates prices

By Bharat Gautam

- Gold rose on Friday as worrying U.S. economic data rekindled some interest in the safe-haven metal, but was likely to log its biggest monthly drop since September on bets for aggressive interest rate hikes by the Federal Reserve.

Spot gold XAU= was up 0.3% at $1,899.00 per ounce, as of 0247 GMT, but had lost about 2% so far this month. U.S. gold futures GCv1 were up 0.6% at $1,902.10.

The disappointing U.S. GDP number could take some pressure off the Fed to tighten quite as aggressively as it has hinted, a rhetoric that has pressured gold in recent weeks, said Ilya Spivak, a currency strategist at DailyFX. nL2N2WP2ZV

"That has given gold a bit of a lifeline, and knocked the dollar back just a bit. I don't expect these moves to continue though," Spivak added.

Fed officials have aligned around plans to accelerate the pace of interest rate hikes this year but remain split over what could be the make-or-break decision of where to stop to avoid dragging the economy into recession. nL2N2WQ1VA

Higher short-term U.S. interest rates and bond yields increase the opportunity cost of holding zero-yield bullion.

Gold prices were headed for their biggest monthly percentage drop since September 2021, as the dollar and U.S. 10-year Treasury yields have strengthened this month.

A stronger dollar makes greenback-priced gold less attractive for other currency holders. The dollar steadied off a 20-year high it reached against rivals in the previous session. USD/

"The freight train, otherwise known as the U.S. dollar, will have to slow down at some point. And that could bode well for gold when it does," trading firm City Index's senior market analyst Matt Simpson said in a note.

Spot silver XAG= gained 0.1% to $23.16 per ounce, platinum XPT= dipped 0.5% to $915.19, and palladium XPD= rose 0.5% to $2,243.74. All were set for monthly falls.


(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Subhranshu Sahu and Vinay Dwivedi)

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