Gold fell to a two-month low on Monday as strong US economic data sparked worries of more interest rate hikes by the Federal Reserve, clouding the outlook for zero-yielding bullion.

Spot gold was steady at $1,811.60 per ounce by 1131 GMT, after earlier hitting its lowest since late December at $1,806.50. US gold futures were unchanged at $1,817.90.

Gold price drops nearly 8% since February 1

“Given how the Fed’s favoured measure of inflation accelerated in January, appetite for zero-yielding gold may be soured by rate-hike bets in the near term – ultimately dragging prices lower,” said Lukman Otunuga, senior research analyst at FXTM.

“Gold (will) remain highly sensitive to chatter by Fed officials, key economic data, and any topic relating to inflation as we head into the new month.”

Data on Friday showed US consumer spending increased by the most in nearly two years in January, while inflation accelerated, adding to market fears that the Fed could continue raising interest rates into summer.

Investors expect the Fed’s target rate to peak at 5.413% in September.

Gold prices hit their highest since April 2022 earlier this month, but have since fallen over 7% after a slew of US data pointed to a resilient economy.

The dollar index slipped 0.2%, but hovered near a seven-week peak.

Top consumer China’s net gold imports via Hong Kong in January fell by about 47% from the previous month.

Spot silver lost 0.4% to $20.69 per ounce.

If global growth is not at risk, it could be a positive sign as demand for silver in industries could shoot higher, supporting metal prices, Motilal Oswal Financial Services said in a note.

Platinum was up 1.6% at $923.80, and palladium gained 0.9% to $1,416.38.