April 27 (Reuters) – Gold prices slipped 1% to a two-month low earlier on Wednesday as a rally in the dollar on expectations of a faster U.S. rate hike hurt the economy. attractiveness of bullion at the price of the dollar.

Spot gold fell 0.6% to $1,894.96 an ounce at 10:01 GMT, after falling to $1,886.09, its lowest since February 25. US gold futures fell 0.4% to $1,896.

“We are in an environment that is certainly not the best for gold,” said Carlo Alberto De Casa, external market analyst at Kinesis. He added that bullion was slowing due to the strength of the US dollar and expectations of hawkish Federal Reserve policy.

The dollar index, which measures its performance against a basket of six major currencies, peaked after March 2020, driven by the prospect of aggressive U.S. rate hikes and safe-haven flows stoked by the slowing global economy. growth in China and Europe.

“Inflationary pressure can be positive for gold if central banks are unable to control rising prices,” De Casa said.

Rising US interest rates have increased the opportunity cost of holding non-performing gold, while boosting the dollar, against which it is valued. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises.

“So $1,900 is clearly a pivotal level for today’s session… Looking further ahead, it doesn’t look ideal at the moment with the US Dollar at a 25-month high,” Matt Simpson said. , senior market analyst at trading firm City Index.

In other metals, spot silver rose 0.4% to $23.57 an ounce, platinum fell 0.6% to $915.37 and palladium jumped 1.7% at $2,224.07.

Reporting by Eileen Soreng and Bharat Govind Gautam in Bengaluru, additional reporting by Swati Verma, editing by Mark Heinrich

Our standards: The Thomson Reuters Trust Principles.