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Gold slides 1% with investors eyeing rising rates

Gold prices came under pressure on Monday after the precious metal took its first monthly fall since December in June, with the dollar pushing higher and expectations growing for higher interest rates in the US and Europe.

The metal was down 1.2 per cent in mid-morning trading in New York to $1,226.86 a troy ounce, after dropping 2.2 per cent last month.

Monday’s fall came as the dollar strengthened by 0.5 per cent against a basket of half-a-dozen world currencies. Gold is priced in dollars, meaning a rising greenback makes it more expensive to international investors.

At the same time, central bankers on both sides of the Atlantic have been taking an increasingly hawkish tone on monetary policy, sending bond yields rising sharply, and stoking expectations for further increases down the line. Gold offers no yield, so stronger returns from bonds may lure investors away.