Gold prices declined on Monday, as the dollar held on to gains following U.S. Federal Reserve Chair Jerome Powell’s signal that the central bank will raise interest rates further to tame sky-high inflation.
Spot gold was down 0.3 percent to $1,732.17 per ounce, as of 0107 GMT, after falling 1.2 percent on Friday.
U.S. gold futures decreased 0.3 percent at $1,745.3.
The dollar index settled close to a two-decade high of 109.29 touched last month. This makes the bullion expensive for those holding other currencies.
“Americans are headed for a painful period of slow economic growth and possibly rising joblessness as the Fed raises interest rates to fight high inflation,” Powell warned on Friday at the Jackson Hole central banking conference in Wyoming.
Higher interest rates boost the opportunity cost of keeping non-yielding bullion, while strengthening the dollar.
“Central banks around the world risk losing public trust and must now act forcefully to combat inflation, even if that drags their economies into a recession,” European Central Bank board member Isabel Schnabel said on Saturday at the symposium.
Gold premiums in top consumer China climbed last week to their highest since October as a fall in global prices encouraged purchases. Moreover, demand wnet down in India as buyers waited for a bigger price drop.
Speculators cut their net long Comex gold position by 15,910 contracts to 30,326 in the week to Aug. 23, data from the U.S. Commodity Futures Trading Commission showed.
