Gold eases after climbing over 1% in previous session

[BENGALURU] Gold prices inched lower during early Asia trade on Friday (Oct 16) after rising more than 1 per cent in the previous session, while market participants tried to gauge the US Federal Reserve’s future policy trajectory.

Spot gold was down 0.4 per cent at US$4,152.99 per ounce, as at 12.05 am GMT, after gaining in the previous session on support from a weaker dollar and lower US Treasury yields. However, prices were on track for a weekly fall.

US gold futures for December delivery rose 0.1 per cent to US$4,173.90.

US producer prices increased by the most in four and a half years in September amid rising costs for goods and services, the latest indication of inflation broadening out beyond energy products.

The data followed Wednesday’s consumer price report, which showed prices accelerated in September on a surge in petrol costs.

According to CME’s FedWatch Tool, traders are currently pricing in a 28 per cent probability of a rate hike later this month and 93 per cent chance of an increase in December.

Chicago Fed president Austan Goolsbee said this week’s stronger-than-expected inflation data has been “discouraging”. Meanwhile, Fed Bank of Cleveland president Beth Hammack said the Fed might need to hike rates more aggressively if there were to be a notable deterioration in the public’s inflation expectations.

While gold is considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding asset.

On the geopolitical front, Yemen’s Houthis fired missiles at the presidential palace complex in the southern city of Aden, killing five people, the government said, as the Saudi-led coalition listed dozens of Houthi attacks on Saudi infrastructure in recent weeks.

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Gold slumps as faster US inflation stokes Fed rate hike wagers

Spot silver fell 0.6 per cent to US$57.09 per ounce, platinum lost 0.1 per cent to US$1,624.05 and palladium rose 0.2 per cent to US$1,128.70. All three metals are headed for weekly losses. REUTERS