Gold flat as firm US dollar offsets support from dovish Fed expectations

GOLD prices were flat in early Asian hours on Thursday (Nov 16) as the US dollar firmed after strong US retail sales data, offsetting support from hopes that the Federal Reserve had come to the end of its tightening cycle.

Spot gold was little changed at US$1,958.79 per ounce, as at 0128 GMT. US gold futures edged 0.1 per cent lower to US$1,961.70.

The US dollar held its ground after bouncing back overnight as robust US economic data clouded the outlook for when the Fed will begin cutting interest rates.

A stronger US dollar makes gold more expensive for overseas buyers.

US producer prices fell by the most in three-and-a-half years in October amid a sharp drop in the cost of petrol, the latest indication of subsiding inflation pressures.

US retail sales fell for the first time in seven months in October, pointing to slowing demand at the start of the fourth quarter that further strengthened expectations the Fed is done hiking interest rates.

On Tuesday, data showed US headline consumer prices were flat in October, against expectations for a 0.1 per cent rise. Core CPI, at 0.2 per cent, also came in below a forecast of 0.3 per cent.

However, San Francisco Fed president Mary Daly warned against calling time on the rate-rising cycle too soon, in an interview to the Financial Times on Wednesday.

Traders widely expect the Fed to leave rates unchanged in December and bet it will start cutting rates by May, according to the CME FedWatch tool.

SEE ALSO

Gold supported by dovish Fed expectations after soft US CPI data

Lower interest rates decrease the opportunity cost of holding gold.

Spot silver fell 0.2 per cent to US$23.39 per ounce, while platinum dipped 0.3 per cent to US$893.37. Palladium was flat at US$1,031.40 per ounce. REUTERS