Gold edges higher as dollar eases; hawkish Fed limits gains

[BENGALURU] Gold prices edged up on Thursday (Nov 25) as the dollar eased slightly, but comments from US Federal Reserve policymakers suggesting the central bank could accelerate stimulus tapering weighed on the metal and kept it well below the key US$1,800 mark.

Spot gold rose 0.2 per cent to US$1,792.05 per ounce by 1.37 am GMT, after slipping to its lowest since Nov 4 on Wednesday (Nov 24).

US gold futures added 0.4 per cent to US$1,791.70.

The dollar index edged 0.1 per cent lower off its highest in 16 months hit on Wednesday, reducing the metal's cost to buyers holding other currencies.

A growing number of Fed policymakers indicated they would be open to speeding up the elimination of their bond-buying programme if high inflation held and move more quickly to raise interest rates, minutes of the US central bank's last policy meeting showed.

An increase in interest rates should reduce bullion's appeal as higher rates raise the non-interest bearing metal's opportunity cost.

The number of Americans filing new claims for unemployment benefits fell to their lowest level since 1969 last week, suggesting economic activity was accelerating.

A separate report from the US Commerce Department on Wednesday showed gross domestic product rose at a 2.1 per cent rate in the third quarter.

Price pressures heated up in October, with the US personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increasing 0.4 per cent.

Meanwhile, the European Central Bank (ECB) must keep borrowing costs in check as the coronavirus pandemic drags on and there is no sign that inflation is getting out of control, ECB board member Fabio Panetta said on Wednesday.

Spot silver rose 0.5 per cent to US$23.64 per ounce. Platinum gained 1.2 per cent to US$986.27 and palladium was up 0.7 per cent at US$1,864.29.

REUTERS