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Gold falls while dollar advances after Powell remarks

Gold falls while dollar advances after Powell remarks
File image of gold bars and coins in a security vault at Pro Aurum in Munich, Germany. August 14, 2019. REUTERS/Michael Dalder

By Arundhati Sarkar

June 23 (Reuters) – Gold traded lower on Thursday as a strengthening dollar and Federal Reserve Chairman Jerome Powell’s remarks on the U.S. central bank’s commitment to reining in price rises reduced its appeal as a refuge.

* By 1056 GMT, spot gold was down 0.4% at $1,829.89 per ounce, and US gold futures were down 0.4% at $1,830.70.

* Although the precious metal is considered a hedge against inflation and economic instability, it also competes with the dollar as a store of value. Therefore, a stronger greenback makes bullion more expensive for foreign buyers.

* Gold is expected to face gradual downward pressure and move towards $1,800 as Powell reiterates the rate hike path and the dollar strengthens, said Xiao Fu, an analyst at Bank of China International.

* “As gold is a haven asset, it will attract buying on demand (recession risk), but the rate hike is very powerful in terms of the impact on other asset classes, including gold,” he said.

* Rising rates in the US raise the opportunity cost of holding non-interest bearing bullion.

* In other precious metals, spot silver was down 1% at $21.17 an ounce; platinum was down 0.7% at $920.06; and palladium was up 0.3% at $1,869.70.

(Edited in Spanish by Carlos Serrano)

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