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Gold Futures Fall 2-Months Low Ahead Of A Possible Rate Hikes

BY Lynnet Okumu · May 4, 2022 09:05 am

KEY POINTS

Spot gold was flat 0.3 percent to 215,246.81 Kenyan Shilling per ounce in global markets. This also represents a near two-month low as investors continue to brace for more aggressive rate hikes from the U.S. central bank.

KEY TAKEAWAYS

Gold traders have pretty much priced in a fairly aggressive set of policy moves by the Federal Reserve, which has put the market in a “Sell the Rumor, Buy the Fact” situation. This means gold could rally if the Fed delivers as expected. Prices are likely to fall further if the tone of the Fed’s monetary policy statement and Fed Chair Jerome Powell’s press conference is scrappier than anticipated.

Gold held around 216,060.25 Kenyan Shilling an ounce on Wednesday 4^th May 2022, hovering near two-month lows and remaining under pressure ahead of a key monetary policy decision from the U.S. Federal Reserve.

The Fed is widely expected to hike rates by a hefty 50 basis points and announce plans to reduce its $9 trillion balance sheet when it concludes its two-day meeting later today. Investors will be watching for an even more hawkish bias from the central bank.

On MCX, gold futures were flat 0.33 percent at 76,479.81 Kenyan Shilling per 10 grams. This is a sharp fall from 84,206.21 shillings per 10 grams from March highs.

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The fall in price is also attributed to the firm U.S. bond yields and a strong U.S. dollar, which diminished the safe-haven appeal of gold.

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Gold traders have pretty much priced in a fairly aggressive set of policy moves by the Federal Reserve, which has put the market in a “Sell the Rumor, Buy the Fact” situation. This means gold could rally if the Fed delivers as expected. Prices are likely to fall further if the tone of the Fed’s monetary policy statement and Fed Chair Jerome Powell’s press conference is scrappier than anticipated.

While gold is perceived as an inflation hedge, higher U.S. interest rates and bond yields lift the opportunity cost of holding zero-yield bullion.

Among other precious metals, spot silver edged up 0.3 percent at 2,628.64 shillings per ounce; platinum firmed 1.4 percent to 109,860.56 shillings, and palladium rose 2 percent to 262,118.73 Kenyan Shilling.

Gold ounce price in Kenya as of 4^th May 2022 is 215,655.91 Kenyan Shilling per ounce, gold gram price is 6,934.27 per gram 24K, 6,356.42 per gram 22K, 6,067.49 per gram 21K, and 5,200.71 per gram 18K.