The Business Times

Gold hovers near 1-week low as dollar steadies ahead of Fed decision

Published Tue, Nov 1, 2022 · 09:51 AM

GOLD prices were flat on Tuesday (Nov 1), after touching their lowest levels in more than one week, as the dollar held firm ahead of the US Federal Reserve’s policy meeting, where the central bank is likely to deliver another oversized interest rate hike.

Spot gold was listless at US$1,633.69 per ounce, as of 0059 GMT, having earlier touched its lowest level since Oct 21.

US gold futures fell 0.3 per cent to US$1,636.30.

The dollar index was steady after rising 0.8 per cent overnight, hurting gold’s appeal for overseas buyers.

US central bankers are expected to keep their inflation fight in high gear this week, even as they intensify a debate over when to downshift to smaller interest rate hikes so as to avoid sending the world’s biggest economy into a tailspin.

The US Fed is likely to raise rates by 75 basis points for a fourth straight time, bringing the target overnight lending rate to a 3.75-4 per cent range.

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Gold is highly sensitive to rising US interest rates, as that increase the opportunity cost of holding the non-yielding metal.

Eurozone inflation surged more than expected in October, data showed on Monday, fuelling expectations that the European Central Bank will press on with big interest rate hikes despite economic growth slowing.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.22 per cent to 920.57 tonnes on Monday from 922.59 tonnes on Friday.

Spot silver rose 0.2 per cent to US$19.18 per ounce, platinum dipped 0.1 per cent to US$924.51 and palladium gained 0.9 per cent to US$1,856.91. REUTERS

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