LONDON: Gold hit a 2-1/2 week low on Monday as the dollar rose ahead of a two day Federal Reserve meeting and global equities surged. The dollar hit an eight week high against the yen as data showing a pickup in US consumer prices increased bets the Fed could raise interest rates again in December.

Investors also expect the Fed will announce plans to start trimming its balance sheet at its meeting on Tuesday and Wednesday in a move that should support the dollar and weigh on dollar-priced gold. World stocks hit a record high ahead of the Fed meeting, with investors favouring risky assets ahead of perceived safe havens such as gold.

Spot gold was down 0.6 per cent at $1,311.51 an ounce by 1346 GMT, having earlier touched $1,309.63, its lowest since Aug 31.

US gold futures for December delivery fell 0.8pc to $1,314.90. “Gold could fall below $1,300 in the short term, but the question remains how people perceive the US economy and the need for higher interest rates,” said Ole Hansen, head of commodity strategy at Saxo Bank. “At this stage there’s still not a strong view the US economy will accelerate. That should keep interest rates at a manageable level and provide some support for gold.”

Silver slipped 1.3pc to $17.65 an ounce after touching its lowest since Aug 31. Platinum dipped 0.3pc to $960.50, while palladium gained 0.9pc to $931.72.70.

Published in Dawn, September 19th, 2017