 "Gold prices falls to near one-year low as ECB rate hike fears loom")
By Brijesh Patel
(Reuters) - Gold prices fell on Thursday to their lowest in nearly a year, weighed down by the prospects of more interest rate hikes by major central banks to tackle soaring inflation.
Although gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding bullion, which pays no interest.
Spot gold was down 0.2% at $1,692.80 per ounce, as of 0516 GMT, after falling to its lowest since early August 2021 at $1,689.40 earlier in the session.
U.S. gold futures fell 0.6% to $1,689.50 per ounce.
"Clearly inflation expectations are receding because the Fed and other central banks are embarking on aggressive tightening regime, which is undermining gold's appeal," said Ilya Spivak, a currency strategist at DailyFX.
The European Central Bank is set to raise interest rates for the first time in 11 years on Thursday, with a bigger-than-flagged move seen as increasingly likely as policymakers fear losing control of runaway consumer price growth.
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The U.S. Federal Reserve is widely expected to raise rates by 75 basis points at its policy meeting next week.
British inflation in June surged to a 40-year peak, bolstering chances of a half-percentage-point Bank of England rate hike next month.
"Gold broke below $1,700/oz as investors continue to reduce exposure to the sector ahead of central bank meetings," ANZ analysts said in a note.
Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3% to 1,005.87 tonnes on Wednesday, their lowest since January. [GOL/ETF]
Capping gold's losses, the U.S. dollar slipped 0.3% against its rivals. A weaker greenback makes gold cheaper for holders of other currencies. [USD/]
Elsewhere, spot silver fell 0.4% to $18.59 per ounce, platinum dipped 0.4% to $854.65, and palladium rose 0.5% to $1,871.35.
(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)