Gold falls to two-month low as dollar surge hurts appeal

Spot gold dropped 1.1% to $1,884.74 per ounce

.

U.S. gold futures settled down 1% at $1,885.7

.

The dollar rallied on expectations of aggressive monetary policy tightening by the U.S. Federal Reserve

.

.

Gold slipped to a more than two-month trough on Wednesday as the dollar rallied on expectations of aggressive monetary policy tightening by the U.S. Federal Reserve

Spot gold dropped 1.1% to $1,884.74 per ounce, after dropping to $1,881.45, its lowest level since Feb. 24. U.S. gold futures settled down 1% at $1,885.7

“There’s a flight to safety right now out of other currencies into U.S. dollar… Gold is going to struggle to rally between now and the Fed meeting,” said Bob Haberkron, RJO Futures senior market strategist

The dollar index charged to its highest level since January 2017, fueled by expectations that the U.S. central bank will be more hawkish than peers and safe-haven flows fanned by concerns over slowing growth in China and Europe

The Fed is expected to increase rates by 50 basis points at its May 3-4 meeting

Rising U.S. interest rates increase the opportunity cost of holding non-yielding gold, while also boosting the dollar, in which it is priced. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises

“We see few participants left with appetite to buy gold,” said analysts at TD Securities in a note