Gold hovers below US$1,800 on dollar strength, sooner rate-hike bets

[BENGALURU] Gold prices edged up on Wednesday (Nov 24), although strength in the US dollar and bets that the Federal Reserve could raise interest rates sooner kept the metal below the key US$1,800 mark.

Spot gold rose 0.3 per cent to US$1,794.96 per ounce by 2.39 am GMT, after slipping as much as 1.4 per cent to its lowest since Nov 5 on Tuesday (Nov 23). US gold futures added 0.6 per cent to US$1,793.90 per ounce.

The dollar index was steady and remained close to its highest in 16 months, raising bullion's cost to buyers holding other currencies.

Investors are betting that the newly renominated Fed Chairman Jerome Powell will need to step up the pace at which the central bank is normalising monetary policy to better grapple with surging consumer prices.

British businesses reported the fastest growth in new orders since June this month alongside record cost pressures, according to a closely watched business survey that could pave the way for a Bank of England rate rise in December.

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

US business activity slowed moderately in November amid labour shortages and raw material delays, contributing to prices continuing to soar halfway through the fourth quarter.

Indicative of sentiment, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.6 per cent to 991.11 tonnes on Tuesday from 985 tonnes on Monday (Nov 22).

Spot silver fell 0.3 per cent to US$23.58 per ounce. Platinum rose 1.1 per cent to US$979.99 and palladium gained 1.2 per cent to US$1,890.21.

The World Platinum Investment Council expects a much larger surplus in the global platinum market this year than it previously forecast and another big oversupply in 2022.

REUTERS