PRECIOUS-Gold falls to over one-month low on stronger dollar, hawkish Fed tone

BY Reuters | ECONOMIC | 07:46 AM EDT

(Updates for EMEA mid-session trading)

* Fed, BoC, and BoJ keep interest rates on hold amid inflation concerns

* ECB expected to hold interest rates steady

* Oil rises over $115 a barrel after Iran strikes Middle East energy facilities

By Pablo Sinha

March 19 (Reuters) - Gold prices fell to their lowest level in more than a month on Thursday, pressured by a stronger dollar and rising Treasury yields, while a hawkish U.S. Federal Reserve further dampened bullion's appeal. Spot gold was down 2.7% to $4,687.19 per ounce as of 1125 GMT, after falling to $4,665.69, its lowest since February 6, earlier in the session.

U.S. gold futures for April delivery fell 4.3% to $4,688.20.

"Gold fell sharply for a second day after breaking key support below $5,000, amid a stronger dollar and a more hawkish tone from Fed Chair Jerome Powell following the latest FOMC meeting," said Ole Hansen, head of commodity strategy, Saxo Bank.

The dollar and benchmark 10-year U.S. Treasury yields rose, making gold more expensive for holders of other currencies and diminishing the appeal of the non-yielding metal.

Central banks in the U.S., Canada and Japan struck hawkish tones this week, wary that rising energy prices could spark a fresh wave of inflation. The European Central Bank is widely expected to keep interest rates on hold on Thursday, but will make clear it stands ready to raise them if the Iran war fuels a lasting surge in euro zone inflation.

While gold is traditionally seen as a hedge against inflation and uncertainty, high interest rates curb its appeal by raising the cost of holding bullion and boosting returns on yield-bearing assets.

Oil prices jumped above $115 per barrel after Iran attacked energy facilities across the Middle East following Israel's strike on its South Pars gas field, a major escalation in the war.

Rising oil prices can feed into inflation as businesses pass on higher costs, which could encourage the Fed to keep rates higher for longer.

"Geopolitical risks are going to linger and be a very strong catalyst for gold prices, so despite short-term consolidation, I could easily see gold at $6,000 by the end of the year," said Nitesh Shah, commodity strategist at WisdomTree. Spot silver fell 6.3% to $70.65 per ounce after having touched $69.95, its lowest since February 6. Spot platinum fell 4.4% to $1,934.90, and palladium lost 1.9% to $1,448.05.

(Reporting by Pablo Sinha in Bengaluru; Editing by Ros Russell and Harikrishnan Nair)

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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