Gold set for worst quarter in five as dollar dominates

Gold set for worst quarter in five as dollar dominates
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BENGALURU (June 30): Gold was mostly quiet on Thursday (June 30) but faced its worst quarter since early 2021 as a remarkable showing from the dollar kept investors away, with bullion's outlook clouded by top central banks adopting aggressive tactics against stubborn inflation.

Spot gold was flat at US$1,817.07 (about RM8,004.74) per ounce by 0339 GMT. US gold futures edged up 0.1% to US$1,819.70.

Gold prices, set to drop for a third straight month, have fallen about 6.2% this quarter.

A combination of rising yields and a stronger US dollar have played their part of gold underperformance, City Index senior market analyst Matt Simpson said, but noted that gold priced in other currencies hadn't performed too badly.

The US dollar hovered near recent two-decade peaks, and could record its best quarter in over five years, making gold more expensive for buyers holding other currencies.

Bringing down high inflation around the world will be painful and could even crash growth, but must be done quickly to prevent rapid price growth from becoming entrenched, the world's top central bank chiefs said on Wednesday.

Higher bond yields and interest rate hikes by central banks to fight inflation raise the opportunity cost of holding bullion, which yields no interest.

Bullion's performance in the second quarter erases gains made earlier in the year as a spiralling Ukraine-Russia conflict lifted demand for the safe haven, with prices back around levels they started 2022 at — just above US$1,800. 

Looking forward, the bias will become increasingly bearish as rate hikes continue to come through and bring down inflation expectations, Ilya Spivak, a currency strategist at DailyFX, said, adding that US$1,780-US$1,790 is a critical support level.

Spot silver was up 0.1% at US$20.72 per ounce, platinum was flat at US$916.66 and palladium gained 1.2% to US$1,986.21. However, they were all still headed for monthly and quarterly losses.