Global gold prices drop

LONDON: Gold prices fell on Tuesday as renewed expectations of an increase in US interest rates next month pushed the dollar higher, although political and economic uncertainties in Europe and the US supported investor sentiment.

Spot gold was down 0.3 percent at $1,233.79 an ounce at 1541 GMT, but has gained more than 6 percent since the start of the year. US gold futures slipped 0.3 percent to $1,235.2. 

The dollar strengthened after Federal Reserve members pointed to the potential for higher US rates next month, making commodities priced in the currency more expensive for non-US



buyers.

“Gold is capped by the likelihood that US monetary policy will be tighter at some stage, potentially in March,” Societe Generale analyst Robin Bhar said. “There is a lot of political uncertainty, there are safe-haven flows going into gold.” 

Bhar added that gold is also an investment hedge against corrections in what look to be overvalued equities. Investor demand for gold can be seen in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, holdings of which have risen by more than 5 percent to 27.044 million ounces since Jan. 31.