Gold firms as dollar softens, but rate-hike fears limit gains

GOLD prices edged higher on Monday (Oct 3) on a softer dollar, although central banks worldwide retained their aggressive monetary policies to tackle soaring inflation, limiting gains for safe-haven bullion.

Spot gold was up 0.3 per cent at US$1,665.29 per ounce, as of 1.15 am GMT.

US gold futures ticked 0.1 per cent higher to US$1,673.30.

The dollar index was down 0.2 per cent, making greenback-denominated gold less expensive for overseas buyers.

Fed policymakers have been resolute in raising interest rates despite a turmoil in global financial markets.

Fed vice chair Lael Brainard on Friday added her full endorsement of the US central bank’s higher-for-longer game plan for interest rates to curb inflation.

Rising interest rates dim bullion’s appeal as they increase the opportunity cost of holding the non-yielding asset.

Eurozone inflation zoomed past forecasts to hit 10 per cent in September, a new record high that will reinforce expectations for another jumbo interest rate hike next month from the European Central Bank.

The physical gold market in India flipped to a premium last week as demand improved ahead of festivities, while Chinese premiums stayed elevated.

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Gold edges higher on softer dollar; set to fall for sixth straight month

India, the world’s second-biggest consumer of gold, slashed the base import prices of the metal on Friday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15 per cent to 939.70 tonnes on Friday.

Comex gold speculators increased net short position by 8,333 contracts to 41,300 in week ended Sep 27, the US Commodity Futures Trading Commission said on Friday.

Spot silver rose 0.7 per cent to US$19.12 per ounce, platinum was 0.3 per cent higher at US$861.50 and palladium was up 0.5 per cent at US$2,167.75. REUTERS