Gold drops from five-month peak ahead of US inflation data this week

GOLD prices fell on Monday (Oct 23), retreating from a five-month peak scaled in the previous session, as robust US Treasury yields cut demand for the non-yielding asset ahead of key inflation and economic growth data due later this week.

Spot gold dropped 0.8 per cent to US$1,965.89 per ounce by 0104 GMT, and US gold futures slid 0.9 per cent to US$1,977.10.

Gold prices hit their highest since mid-May on Friday and recorded their second consecutive weekly rise, as investors opted for the safety of bullion against the Middle East conflict.

A relentless selling of US government bonds has brought Treasury yields to their highest level in more than a decade and a half, curbing demand for gold, which does not yield any interest.

This week, investors will focus on the US PCE price index – the Federal Reserve’s favoured inflation gauge, US GDP figures for the third quarter, the European Central Bank’s rate decision and global flash PMIs.

Atlanta Fed president Raphael Bostic said on CNBC on Friday that while inflation remains too high it is coming down amid mounting evidence of an economic slowing, and that could open the door to easier monetary policy late next year.

China will promote a sustained economic recovery, focusing on expanding domestic demand, while fending off financial risks, People’s Bank of China governor Pan Gongsheng said in a report published on Saturday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.8 per cent on Friday.

Comex gold speculators switched to net long position of 41,867 contracts in the week to Oct 17, adding 56,655, data showed on Friday.

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Mid-East turmoil pushes safe-haven gold to second weekly rise

Gold set for second weekly gain on Middle East turmoil

Physical gold dealers in India were forced to offer steeper discounts last week as a jump in domestic prices slowed demand ahead of a key festival, while top consumer China saw a slight drop in premiums.

Spot silver fell 1.2 per cent to US$23.07 an ounce, platinum slipped 0.7 per cent to US$888.61 and palladium was down 0.1 per cent to US$1,096.58. REUTERS