PRECIOUS-Precious metals fall as dollar firms, gold hits 1-week low

BY Reuters | ECONOMIC | 08/15/22 10:38 AM EDT

* Gold hit its lowest since Aug. 8

* Silver, palladium and platinum fall over 3% (Recasts, adds comments, updates prices)

By Ashitha Shivaprasad

Aug 15 (Reuters) - Gold fell over 1% to its lowest in a week on Monday amid sharp declines across precious metals due to a stronger dollar, with concerns over further rate hikes by the U.S. Federal Reserve adding to pressure on bullion.

Spot gold slid 1.4% to $1,776.49 per ounce by 09:54 ET, having hit its lowest since Aug. 8 earlier in the session. U.S. gold futures dropped 1.2% to $1,792.90.

The dollar index rose 0.4%, making gold and other commodities priced in the greenback more expensive for oversees buyers.

"Gold has stuck around the $1,800 handle, and today a stronger dollar is pushing gold and the entire commodity complex lower," said RJO Futures senior market strategist Bob Haberkorn.

"It is a cautious trade right now in gold, as the Fed is going to continue raising rates ... investors do see rate hikes in the horizon."

Investors await minutes from the Fed's July meeting on Wednesday for cues on the likely magnitude of rate hikes in the coming months.

Higher rates tend to increase bond yields, raising the opportunity cost of holding non-yielding bullion.

Gold and silver prices are also lower on demand concerns after weak economic data from China, said Jim Wyckoff, senior analyst at Kitco Metals in a note.

Industrial output in China, the world's top consumer of gold, expanded at 3.8% in July from a year earlier, slowing from a 3.9% rise in June.

Bullion attracts safe-haven flows during recession worries, but a slowing economy could potentially lead to low demand for physical gold.

Spot silver fell 3% to $20.18 per ounce, platinum dropped 3.4% to $929.36, and palladium slipped 3.2% to $2,151.42.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Vinay Dwivedi)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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