Gold stable on expectations of less hawkish Fed

Bengaluru — Gold prices were flat on Thursday, hovering near a two-week peak hit a day earlier, as anticipation of the US Federal Reserve easing the pace of its interest-rate hikes kept a lid on dollar.

Spot gold was flat at $1,664.09 per ounce, at 4.02am GMT. Prices hit a two-week high on Wednesday at $1,674.76.

US gold futures were flat at $1,668.60.

The dollar index edged up 0.2% after hitting its lowest level since September 20 earlier. A weaker dollar makes greenback-priced gold less expensive for overseas buyers.

There have been some indications that other central banks and the Fed’s rhetoric is softening, and that “has given us room for the dollar to correct lower, for risk appetite to perk up and for gold to find a bit more footing”, said Ilya Spivak, a currency strategist at DailyFX.

Overnight, the Bank of Canada announced a smaller-than-expected rate hike and said it was getting closer to the end of its historic monetary tightening campaign.

A commerce department report showed sales of new US single-family homes dropped in September and data for the prior month was revised lower, supporting the view that Fed rate increases were already working.

The Fed is widely expected to announce a fourth straight 75 basis-point (bps) rate increase next month.

Rising interest rates increase the opportunity cost of holding non-yielding bullion.

Investors will keep a watch on advance GDP estimates by the US commerce department and the European Central Bank’s (ECB) policy decision due later in the day.

If Friday’s personal consumption expenditures number is not wildly hotter than anticipated, gold could test $1,700, and then if the Fed stays “neutral”, it could attempt to poke even above that, Spivak added.

Spot silver fell 0.6% to $19.50 per ounce, platinum eased 0.4% to $947.63 and palladium rose 0.3% to $1,968.13.

Reuters