Gold recovers on technical buying, softer US dollar

GOLD prices rose on Monday (Oct 17), supported by technical trading after the previous session’s steep fall and a pause in the dollar rally, although an impending oversized rate hike by the US Federal Reserve limited bullion’s appeal.

Spot gold was up 0.5 per cent at US$1,650.49 per ounce, as of 1.49 am GMT. Prices fell more than 1 per cent on Friday and marked its biggest weekly decline since July.

US gold futures were up 0.4 per cent at US$1,656.00.

The dollar index was down 0.1 per cent, easing some pressure on the greenback-priced gold.

A “hotter-than-expected” September inflation report doesn’t necessarily mean the US central bank needs to raise rates higher than officials projected at their most recent policy meeting, St Louis Fed president James Bullard said on Friday, though it does warrant continued “frontloading” through larger hikes of three-quarters of a percentage point.

Gold is highly sensitive to rising US rates, which increases the opportunity cost of holding non-yielding gold.

A survey from the University of Michigan on Friday showed consumer sentiment improved further in October, but inflation expectations deteriorated a bit as average national petrol prices moved back up towards US$4 per gallon after falling over the summer.

Physical gold buying improved in India last week as prices cooled ahead of the Dhanteras and Diwali festivals later this month, while Chinese premiums stayed elevated amid robust demand.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.34 per cent to 941.13 tonnes on Friday.

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Gold heads for worst week in 2 months as dollar rises

Speculators cut their net long Comex gold position by 3,651 contracts to 1,290 in week to Oct 11, data showed on Friday.

Spot silver rose 1 per cent to US$18.44 per ounce, platinum was 0.5 per cent higher at US$903.63 and palladium gained 1.9 per cent to US$2,025.80. REUTERS