Gold traded at the lowest in more than two years early on Monday as investors continue to make the US dollar their safe haven of choice ahead of interest-rate hikes coming from the Federal Reserve's policy committee this week.
Gold for December delivery was last seen down US$9.90 to US$1,673.60 per ounce, the lowest since April, 2020.
The drop comes a day prior to the start of the Federal Open Market Committee's two-day meeting, which is expected to end with a hike to US interest rates expected to be at least 75 basis points, with some worrying the central bank could move to raise rates by a full percentage point after August inflation ran hotter than expected.
The threat rates hikes will push major economies into recession is pushing investors to the safety of the dollar, with the greenback trading near 20-year highs. Bond yields are also rising, touching the highest in more than a decade on Monday.
"Gold remains below $1680 and may struggle ahead of Wednesday's FOMC rate decision given its potential impact on the dollar and Treasury yield as well as its impact on the terminal rate, currently priced around 4.5% by next March," Saxo Bank noted.
The ICE dollar index was last seen up 0.26 points to 110.03, while the yield on the US 10-year note was last seen up 1.9 basis points to 3.472 after earlier touching 3.512, the highest since early 2011.
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