Gold eases from one-week high as dollar rebound dims appeal

[BENGALURU] Gold prices eased on Friday after rallying to a one-week high above the key US$1,750 level in the previous session, as the dollar rebounded and made the metal expensive for holders of other currencies.

Spot gold fell 0.1 per cent to US$1,754.64 per ounce by 1.39am GMT, after rising nearly 1.8 per cent on Thursday as the dollar index slipped.

The dollar recouped most of those losses on Friday and began the final quarter of 2021 at close to its highest level of the year.

US gold futures dropped 0.1 per cent to US$1,755.90.

Chicago Federal Reserve Bank president Charles Evans said on Thursday supply shocks that are pushing up on prices now will ease next year, and low interest rates will still be needed to bring US inflation back durably to 2 per cent.

Bank of Japan policymakers in September saw rising risks to the economy from slowing Chinese growth, semiconductor shortages and South-east Asian factory shutdowns, which could affect growth projections at its next policy-setting meeting.

Gold is traditionally seen as an inflation hedge, although reduced central bank stimulus and interest rate hikes tend to push government bond yields up, in turn translating into a higher opportunity cost for gold that pays no interest.

Data on Thursday showed an unexpected rise in weekly US jobless claims to a seasonally adjusted 362,000 for the week ended Sept 25. Economists in a Reuters poll had forecast 335,000 applications.

A majority of the US Senate on Thursday voted to keep the government fully operating at the end of this week when the new fiscal year begins.

Silver fell 0.6 per cent to US$22.06 per ounce.

Platinum was down 0.9 per cent to US$954.51 and palladium edged 0.1 per cent lower to US$1,907.96.

REUTERS