Gold prices gain as dollar dips with Fed meet in focus

GOLD prices edged higher on Monday (Sep 19), supported by a weaker dollar, as investors assessed some risk of aggressive rate hikes expected this week by major central banks especially the US Federal Reserve to tame inflation.

Spot gold was up 0.2 per cent at US$1,677.89 per ounce, as of 12.22 am GMT. US gold futures rose 0.2 per cent to US$1,686.50.

The dollar index was down 0.2 per cent, making bullion less expensive for overseas buyers.

The US Fed’s Federal Open Market Committee is expected to begin its 2-day meeting on interest rates on Sep 20 and announce its decision the following day.

Most of the banks meeting this week - from Switzerland to South Africa - are expected to hike, with markets split on whether the Bank of England will go by 50 or 75 basis points.

Meanwhile, US consumers’ near-term inflation expectations fell to a 1-year low in September, easing fears that the Fed could raise interest rates by a full percentage point next week.

Gold is known as a safe investment amid inflation woes, but high interest rates increase the opportunity cost of holding non-yielding bullion.

Physical gold demand picked up in India as domestic prices fell ahead of key festivals, while premiums in China climbed further as its currency weakened.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.1 per cent to 960.85 tonnes on Friday from 962.01 tonnes on Thursday.

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Gold dips on stronger dollar, Fed concerns

Speculators switch to net short position of 10,132 contracts in week to Sep 13 in Comex gold, while trimmed net short position in Comex silver, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Spot silver gained 0.2 per cent to US$19.59 per ounce.

Platinum fell 0.1 per cent to US$906.15 and palladium was down 0.2 per cent at US$2,129.55. REUTERS