Gold Drops As Dollar Gains On US Fed Interest Rate Hike Concerns

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Gold in the international markets dropped, after worries that the next interest rate hike in the US could be as early as April, saw fresh selling in the precious metal.

Gold dropped to a one-month low at $1215 an ounce. There were worries that the next interest rate hike in the would be in April, after St. Louis Fed President James Bullard supported a rate hike, possibly as soon as in the next policy meeting in April.

Gold Drops As Dollar Gains On US Fed Interest rate Hike Concerns
Reuters reported that the dollar hit a 1-1/2-week high versus a basket of currencies, extending last week's gains as expectations for an April U.S. rate hike strengthened.

Gold prices have had a good run this year, as investors sold equity in Jan and Feb and purchased the safe haven asset. However, as interest rates in the US rise, there are worries that gold may fall.

However, analysts say that just one or two interest rate hikes in the US should not bother gold rates too much. However, beyond that there maybe reason to worry, as gold prices and US interest rates are inversely related.

A rise in US interest rates, would mean a drop in gold rates and vice versa. In any case, gold this year has given steady returns to investors.

GoodReturns.in

Read more about: us fed
Story first published: Monday, March 28, 2016, 13:49 [IST]
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