Gold edges lower as dollar climbs to near one-week high ahead of Fed verdict

[BENGALURU] Gold inched lower on Wednesday (Dec 10), as the dollar rose after a US jobs report indicated a stronger-than-expected labour market, pressuring prices, ahead of a widely anticipated rate cut at the Federal Reserve’s policy meeting.

Spot gold edged down 0.1 per cent to US$4,207.39 per ounce, as at 9.02 am.

US gold futures for February delivery were steady at US$4,236.60 per ounce.

The US dollar advanced on Tuesday to a near one-week high as better-than-expected job-market figures underscored a still resilient labour market ahead of the Federal Reserve’s anticipated rate cut.

Benchmark US 10-year Treasury yields advanced on Tuesday, erasing earlier declines, keeping steady at 2½ month highs hit on Monday.

The US Labor Department released its JOLTS report, which showed job openings rose to 7.67 million in October, beating forecasts of 7.15 million, pointing to a stronger labour market.

Meanwhile, White House economic adviser Kevin Hassett, the front-runner to be the next Fed chair, told the WSJ CEO Council on Tuesday there is “plenty of room” to cut interest rates further. However, he added that if inflation rises, the calculation may change.

Analysts expect the Fed to make a “hawkish cut”, where the language of the statement, median forecasts and Chair Jerome Powell’s press conference point to a higher bar for further rate reduction.

The two-day Federal Open Market Committee (FOMC) meeting ends with a decision on Wednesday. Investors are now pricing in an 88.6 per cent chance of a 25-basis-point cut.

SEE ALSO

Gold rises but investors stay cautious about ‘hawkish’ Fed tone

Non-yielding assets such as gold tend to perform well in low-interest-rate environments.

Spot silver climbed to 0.5 per cent to an all-time high of US$61.02 per ounce after having crossed the US$60 threshold on Tuesday.

Elsewhere, platinum lost 1 per cent to US$1,672.70, while palladium fell 1 per cent at US$1,491.0. REUTERS