PRECIOUS-Gold bound for dismal quarter on aggressive rate hike fears

BY Reuters | ECONOMIC | 09/30/22 12:48 PM EDT

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Gold down 7.7% for the quarter

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Silver, platinum set for second straight quarterly declines

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Palladium adds about 12% so far this quarter

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Dollar faces a weekly decline

(Updates prices)

By Kavya Guduru

Sept 30 (Reuters) - Gold rose to a one-week high as the dollar retreated from recent highs on Friday but bullion was headed towards its worst quarter since March last year, buckling under fears of impending large interest rates by the U.S. Federal Reserve.

Spot gold rose 0.4% to $1,666.79 per ounce by 12:24 a.m. EDT (1624 GMT) and has gained 1.4% so far this week. U.S. gold futures added 0.5% to $1,677.10.

"The gold market's at an area where we can see some movement higher... (but) that's all dependent on what the dollar does and rates going into the weekend," said Daniel Pavilonis, senior market strategist at RJO Futures.

Gold is down 7.7% for the quarter so far. This would also be bullion's sixth straight monthly drop, its longest streak of monthly declines in four years.

Gold showed muted reaction after Russian President Vladimir Putin signed treaties to annex four Ukrainian regions partly occupied by his forces.

"We're really facing high-inflation environment, which is ultimately the reason why the Fed has to be so aggressive. These macro forces really sap investment appetite from gold and so investors aren't looking at the metal as proper safe haven hedge," said Daniel Ghali, commodity strategist at TD Securities.

Rising interest rates dim bullion's appeal as they increase the opportunity cost of holding the non-yielding asset.

Spot silver rose 1.4% to $19.08 per ounce, while platinum fell 0.5% to $860.93. Both metals were headed for their second straight quarterly decline.

Palladium shed 1.4% to $2,169.59 per ounce, and has gained about 12% so far this quarter.

"We expect PGMs to perform better than other metals as the prospects of the auto sector improve in 2023, particularly demand for auto catalyst metals platinum and palladium," analysts at ANZ said in a note.

"Issues with mine supply from South Africa mean that both platinum and palladium markets are likely to remain relatively tight." (Reporting by Kavya Guduru in Bengaluru; Editing by Marguerita Choy and Shailesh Kuber)

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.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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