Gold eases as stronger US dollar weighs, Fed meeting in focus

[BENGALURU] Gold prices edged lower in early Asian trade on Tuesday (Oct 27) as a firmer US dollar weighed on greenback-denominated bullion, while investors awaited the US Federal Reserve’s policy meeting this week for clues on the interest rate outlook.

Spot gold was down 0.1 per cent at US$4,013.70 per ounce by 0045 GMT, while US gold futures for December delivery dropped 0.3 per cent to US$4,027.10.

A firmer US dollar reduces the appeal of greenback-priced bullion for overseas buyers.

Fed policymakers have telegraphed they will not raise US short-term borrowing costs again this week, but with inflation concerns still front and centre, investors believe a rate hike pause will not last for long.

Markets await the Fed’s policy decision on Wednesday along with the Personal Consumption Expenditures data on Thursday, a key gauge closely watched by the central bank as it targets a 2 per cent inflation rate.

Traders are pricing in about an 11 per cent chance of a rate hike this week and an 82 per cent chance of a December increase, according to the CME’s FedWatch Tool.

While gold is often seen as a hedge against inflation, higher interest rates tend to reduce the appeal of non-yielding bullion.

On the geopolitical front, the Saudi-led coalition in Yemen said it intercepted and destroyed three ballistic missiles launched by Yemen’s Houthis towards Saudi Arabia’s Eastern Region early on Tuesday.

Separately, top officials from Saudi Arabia, Turkey and Pakistan met Iranian officials in Teheran on Monday in a bid to de-escalate the Middle East conflict.

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In other metals markets, Russia’s Nornickel, the world’s largest palladium producer, said a planned furnace overhaul could reduce output of key metals in 2027 to 2028.

Spot silver edged 0.1 per cent higher to US$53.97 per ounce, platinum steadied at US$1,527.81 and palladium slid 0.7 per cent to US$1,042.43. REUTERS