Gold Prices Sink to Year Low as Dollar Reigns Supreme on Powell's Upbeat Outlook
Published Jul 17, 2018 01:51PM ET
Investing.com – Gold prices fell to a year low Tuesday, pressured by a rally in the greenback as Federal Reserve Chairman Jay Powell said gradual rate hikes would continue.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $11.60, or 0.94%, to $1,228.00 a troy ounce, after trading as high as $1,245.10 intraday.
In his semi-annual testimony to Congress Tuesday, Powell said the "best way forward" is to continue raising rates, as the job market has strengthened and inflation has met the Fed's 2% target.
That reaffirmed investor expectations that the Federal Reserve will increased interest rates twice more this year, prompting investors to pile into the dollar, reducing demand for the yellow metal.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.45% to 94.69.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding gold as it pays no interest.
The stronger dollar also saw other metals retreat sharply as aluminum gave up gains to trade near session lows, while platinum futures fell to a two-week low.
Copper prices fell 0.56% to $2.75, while zinc prices rose 0.96% to 2,507.50.
Aluminium prices fell 1.25% to 2,033.00, while Nickel futures lost 0.868% to 13,545.00.
Silver futures fell 1.25% to $15.61 a troy ounce, while platinum futures fell 0.57% to $821.70.
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Written By: Investing.com
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