Gold edges up as dollar slips, Fed outlook in focus

GOLD edged up on Friday (Oct 16) as a softer US dollar lent support, while market participants focused on the US Federal Reserve’s future policy trajectory.

Spot gold rose 0.3 per cent to US$4,184.34 per ounce by 8.24 am GMT but was down 0.2 per cent so far in the week.

US gold futures for December delivery rose 0.9 per cent to US$4,205.70 per ounce.

The US dollar headed for its first weekly fall in five weeks, making greenback-priced bullion more affordable for holders of other currencies.

Federal Reserve chair Kevin Warsh voiced optimism about US economic strength, but gave no preview about whether he feels more interest-rate hikes will be needed, or when.

“Fed chair Warsh offered nothing new on policy at his (International Monetary Fund) speech, leaving market pricing for an October hold intact and creating room for a further gold rebound in the near-term,” said Nikos Tzabouras, an independent financial markets analyst.

Traders largely expect the US central bank to hold rates steady in October, while pricing in a 91 per cent chance of a rate hike in December, going by the CME’s FedWatch Tool.

Data on Thursday showed US producer prices increased by the most in 4½ years in September, the latest indication of inflation broadening out beyond energy products. The data followed Wednesday’s consumer price report, which showed prices accelerated in September.

Although gold is typically seen as an inflation hedge, higher interest rates tend to reduce the appeal of non-yielding metal.

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“A retreat in yields and the US dollar would pave the way for gold to resume its rise above $5,000 per ounce in 2027,” analysts at ANZ said in a note.

Elsewhere, several large Indian mutual funds issued public notices late on Thursday suspending bulk subscriptions to gold exchange-traded funds.

Among other metals, spot silver rose 0.5 per cent to US$57.75 per ounce, platinum gained 0.9 per cent to US$1,639.46 and palladium was up 0.9 per cent to US$1,136.17. However, all three metals headed for weekly losses.