Gold flat as geopolitical tensions ease; focus on future Fed path

GOLD prices were flat on Thursday (Nov 17) as safe-haven demand from latest geopolitical concerns faded, while hopes that the US Federal Reserve would be less aggressive on rate hikes over coming months underpinned the market.

Spot gold was mostly unchanged at US$1,773.40 per ounce, as of 0103 GMT.

US gold futures were little changed at US$1,776.20 per ounce.

Gold prices hit a three-month peak of US$1,786.35 per ounce on Tuesday, after news that Russian missiles killed two people in Poland near the Ukraine border.

However, Poland’s president on Wednesday said a missile that hit his country was probably a stray Ukrainian defence projectile, dispelling fears that it came from Russia and could widen the Ukraine crisis.

Focus remained on Fed’s interest rate strategy, with traders pricing in a 93 per cent probability of a 50 basis-point of rate hike at the US central bank’s December meeting.

San Francisco Fed president Mary Daly told CNBC it’s reasonable for the Fed to raise its policy rate to a 4.75-5.25 per cent range by early next year, and that pausing rate hikes is not part of the discussion.

Rising interest rates tend to dull bullion’s appeal as the metal pays no interest.

Data showed US retail sales increased more than expected in October, boosted by purchases of motor vehicles and a range of other goods, suggesting that consumer spending could help to underpin the economy in the fourth quarter.

SEE ALSO

Gold firms on Fed slowdown hopes, latest Russia jitters

US 10-year Treasury yields were hovering near a one-month low, reducing the opportunity cost of holding non-interest-bearing gold.

Spot silver eased 0.3 per cent to US$21.41 per ounce. Platinum fell 0.3 per cent to US$1,003.4 and palladium was down 0.2 per cent at US$2,067.10. REUTERS