Softer dollar helps give gold a nudge

Bengaluru — Gold prices edged up on Thursday as the dollar eased, but hawkish comments by US Federal Reserve policymakers dented the metal’s appeal and kept it well below the key $1,800 mark.

Spot gold rose 0.2% to $1,791.76/oz by 5.01am GMT, after slipping to its lowest level since November 4 on Wednesday. US gold futures added 0.4% to $1,791.60.

The dollar index edged 0.1% lower off a 16-month high hit in the previous session, reducing the metal’s cost to buyers holding other currencies.

Gold has slumped 4.5% from last week’s five-month high, with a growing number of Fed policymakers indicating they were open to accelerating stimulus tapering and raising interest rates quicker if high inflation held, minutes of the US central bank’s most recent policy meeting showed.

“As markets price in some monetary policy normalisation, that should weigh on gold in the short term. But major central banks are unlikely to aggressively hike rates given the fiscal burden of higher interest rates and large government debt accumulated” said Hitesh Jain, lead analyst at Mumbai-based Yes Securities.

This more moderate monetary policy normalisation and the potential loss of momentum in economic growth in 2022 as the base effects of the pandemic wear off, should support gold in the longer term, Jain added.

Higher interest rates raise non-interest-bearing gold’s opportunity cost.

Investors also took stock of a raft of data on Wednesday that included an upwards revision to US third-quarter GDP and a fall in weekly jobless claims to their lowest since 1969 last week.

However, data also showed price pressures heated up in October, with the US personal consumption expenditures price index, excluding the volatile food and energy components, increasing 0.4%.

Spot silver rose 0.3% to $23.59/oz. Platinum rose 1.6% to $989.77 and palladium gained 2.3% to $1,893.76.