Gold edges down as firmer dollar dents appeal

[BENGALURU] Gold prices edged lower on Tuesday as a firmer dollar dulled the metal's appeal, while the market looked forward to cues from the US Federal Reserve's policy meeting.

Spot gold was down 0.1 per cent at US$1,777.93 per ounce by 3.18am GMT. US gold futures fell 0.1 per cent to US$1,778.10 per ounce.

"We're starting to see a bit of a perking up of the US dollar and bond yields as well, and that seems to be the driving catalyst at the moment," said DailyFX currency strategist Ilya Spivak.

The dollar index edged up against its rivals, making gold more expensive for other currency holders, while benchmark US 10-year Treasury yield held close to the 1.570 per cent level.

Market participants are now looking at the US Fed's two-day policy meeting, which ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to Chairman Jerome Powell's outlook on the economy.

"The most likely scenario that the markets are looking for is a status quo result," Mr Spivak said, adding however, "the Fed is going to have a hard time sounding any more dovish than they already have been."

Japan's central bank kept its monetary policy steady, while new restrictions to counter a surge in Covid-19 cases clouded prospects of a fragile economic recovery.

Meanwhile, India ordered its armed forces on Monday to help tackle surging new coronavirus infections, as nations pledged urgent medical aid to try to contain an emergency overwhelming the country's hospitals.

Palladium edged 0.2 per cent lower to US$2,920.78 per ounce, after hitting an all-time high of US$2,941 on Monday.

"Pent up demand in the auto sector is likely to fuel strong demand for PGM (Platinum Group Metals)-rich catalytic converters amid rising restrictions on emissions," ANZ analysts wrote in a note.

Silver fell 0.3 per cent to US$26.12 per ounce. Platinum was down 0.4 per cent at US$1,238.57.

REUTERS