Gold rises, set for weekly gain on softer US dollar

[BENGALURU] Gold inched higher and was poised for a second weekly gain on Friday (Oct 22), as a softer dollar provided some respite against higher US bond yields and rising expectations that central banks could begin easing economic support.

Spot gold rose 0.1 per cent to US$1,785.00 per ounce by 2.16 am GMT. US gold futures edged 0.2 per cent higher to US$1,786.00.

Bullion prices were en route to a second week of gains, aided by a weaker dollar which was set to decline this week.

Bullion prices have traded in a broad US$1,749-US$1,800 range so far this month, with a steep rally in US benchmark 10-year Treasury yields limiting its upside.

The US Federal Reserve should let its US$8 trillion balance sheet reduce over the next couple of years, Fed Governor Christopher Waller said on Thursday.

Atlanta Fed President Raphael Bostic also said he expects high inflation to persist into 2022 and the US central bank should raise interest rates by the end of next year.

The Bank of Japan is discussing phasing out a Covid-19 loan programme if infections in the country continue to dwindle, sources told Reuters, potentially setting the bank up to exit a key crisis-mode policy sooner than investors expect.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for holding bullion which pays no interest.

Spot silver rose 0.2 per cent to US$24.18 an ounce and was on track for a fifth consecutive weekly gain.

Platinum was up 0.5 per cent at US$1,053.80 per ounce and palladium gained 1 per cent to US$2,037.56.

REUTERS