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Gold hits three week low

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Gold fell to the lowest in more than three weeks as UK inflation returned to double digits, intensifying pressure on the government and central bank to act.

Gold fell as much as 0.9% to the lowest since September 28 as data showed UK consumer prices in September matched a 40-year high and exceeded economists’ expectations. The figures add to pressure on policy makers to lift interest rates significantly, weakening the attraction of non-interest bearing gold.

The dollar has continued to strengthen, rising 0.3% on Wednesday, after a slew of US economic data reinforced expectations of the Federal Reserve’s hawkish policy path. The central bank’s tightening stance has weighed on bullion this year by pushing up the greenback and bond yields, causing the metal to slide about 20% from a high reached in March.

Atlanta Fed President Raphael Bostic reiterated that the bank is focused on cooling inflation that’s running at its hottest in four decades. Treasury yields traded near multi-year highs ahead of US housing figures for September and the Fed’s Beige Book due later Wednesday.

The US currency remains a headwind as the Federal Reserve pursues an aggressive monetary policy to battle inflation.

Gold traded 0.7% lower at $1,640.73 an ounce by 10:40 a.m. London time. Silver, platinum and palladium all fell.

© 2022 Bloomberg

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