Gold drops on firmer dollar

WASHINGTON: Gold prices dropped on Thursday as the dollar firmed on hawkish comments from US Federal Reserve officials that stoked expectations of a US interest rate hike in March.

Spot gold fell 0.4 percent to $1,244.72 per ounce by 0715 GMT.

On Monday, the metal rose to $1,263.80, its highest since Nov. 11. US gold futures fell 0.3 percent to $1,245.30. The dollar index , a measure of the greenback against a basket of six other major currencies, hit 102, its highest since Jan. 11.

“Gold price may see a little bit of selling pressure at this moment on hawkish comments coming from the Fed officials. The interest rate hike in March is very likely and almost written on the wall,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

“We can also see that the general political climate worldwide is changing. Even people who are not interested in gold, but tend to be risk-averse, are investing in gold for caution.”

Despite the hawkish rate back- drop, gold has been performing impressively considering that US equity markets also surged to new highs, INTL FCStone analyst Edward Meir said. The Dow Jones Industrial Average blasted through the 21,000point mark for the first time on Wednesday.

US consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years. Fed Gov. Lael Brainard on Wednesday said that it may be “appropriate soon” to raise interest rates as the global economy seems to have turned a corner.

More Fed policy- setters, including Chairwoman Janet Yellen and Vice Chairman Stanley Fischer, will speak on Friday, likely providing further signals on the Fed’s policy path ahead of the March 14-15 meeting. Spot gold may retest a resistance at $1,252 per ounce, a break above which could lead to a gain to the next resistance at $1,258, according to Reuters technical analyst Wang Tao.