London - Gold prices hit a four-week low
on Wednesday as the dollar gathered strength on the prospect of
a US interest rate hike.
Investors are awaiting February non-farm payrolls data on
Friday as a barometer of the US economy after Federal Reserve
Chair Janet Yellen said last week that the central bank was
poised to lift rates provided jobs and inflation data held up.
These comments were seen as cementing plans for an increase
at the Fed's March 14-15 meeting.
Spot gold fell 0.26 percent to $1 212.45 per ounce at
1040 GMT, after touching its lowest since February 3 at $1,210.92,
putting it on track for its fifth straight session in the red.
"Non-farm payrolls ... will provide final confirmation of a
rate hike next week and this could put more pressure on gold,"
Julius Baer commodities analyst Carsten Menke said.
"Higher rates tend to put pressure on gold prices because
they raise the opportunity cost of holding non-yielding bullion
while boosting the dollar, in which it is priced.
Gold could dip below $1 200 before Friday's data," Menke
said.
The dollar index, which pits the greenback against
six major currencies, inched up 0.1 percent.
On the other hand, ETF Securities' Martin Arnold said he
expected the backdrop of political risk in France and a lack of
policy certainty in the US to create support for gold prices
as the interest rate increase was already priced in.
"And if the Fed doesn't follow up their tough talk with
action then its certainly a bullish environment for gold,"
Arnold said, referring to expectations of three rate hikes this
year.
In other precious metals, silver edged down by 0.7
percent to $17.37 per ounce, after earlier touching $17.34, its
lowest since February 6.
Platinum inched 0.2 percent lower to $958.30 per
ounce. The metal hit its lowest since January 20 at $954 in the
previous session.
Palladium eased 0.7 percent, to $766.80 per ounce.