Gold inches higher as US dollar dips

Bengaluru — Gold prices edged higher on Tuesday as a softer US dollar offset risks from looming aggressive interest hikes by the Federal Reserve.

Spot gold was up 0.2% at $1,651.75 an ounce at 4.12am GMT. US gold futures were down 0.3% at $1,659.80.

The dollar index hit a one-and-a-half-week low taking some pressure off the greenback-priced bullion. Benchmark US 10-year Treasury yields eased but were not far from 14-year highs touched last week.

The steady drum beat of hawkish Fed rhetoric and the fact that 10-year yields are still hanging around 4% are still affecting gold, said Stephen Innes, managing partner at SPI Asset Management.

“We’ll need to see those drop significantly to create a significant impulse to send gold higher,” Innes said.

Gold has fallen nearly 10% so far for the year as sharp US interest rate hike increased the opportunity cost of holding the non-yielding asset and boosted the dollar and bond yields. A fourth straight 75-basis-point Fed interest rate hike is expected next month after data last week showed inflation increasing strongly in September.

According to Reuters’ technical analyst Wang Tao, spot gold looks neutral in a range of $1,641-$1,658 an ounce, and an escape could suggest a direction.

Holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, fell by 2.03 tonnes on Monday. Spot silver rose 0.6% to $18.79 an ounce, platinum was 0.2% higher at $917.72 and palladium gained 1.1% to $2,021.71.

Reuters