Gold slips as investors await Fed rate signals
The central bank will skip rate hikes for October, say economists polled by Reuters
[BENGALURU] Gold slipped on Wednesday (Oct 21) as investors awaited next week’s US Federal Reserve policy decision for fresh signals on the trajectory of US interest rates.
Spot gold was down 0.1 per cent at US$4,118.64 per ounce by 0018 GMT, while US gold futures for December delivery dropped 0.1 per cent to US$4,137.60.
The Fed will skip raising interest rates in October and deliver a hike in December, according to nearly all economists polled by Reuters, as policymakers signal patience even as stubborn inflation argues for a tougher response.
Focus has turned to the Fed’s October 27 to 28 policy meeting and next week’s Personal Consumption Expenditures data, a key gauge closely watched by the central bank as it targets a 2 per cent inflation rate.
According to CME’s FedWatch Tool, traders are pricing in an 84 per cent chance that the central bank will leave rates unchanged next week, while expectations for a hike in December remain at 90 per cent.
Higher interest rates typically weigh on gold prices because they increase the opportunity cost of holding bullion, which does not pay interest.
The Bank of Japan will raise rates in December to 1.5 per cent, following June and September increases, according to a majority of economists in a Reuters poll, keeping up a quicker pace in a campaign that started with just one rate rise a year.
Bank of England (BoE) policymaker Megan Greene said the risks of a pickup in broader inflation from the energy price shock caused by the Iran war were greater than the BoE expected. She reiterated her view that interest rates should go up.
On the geopolitical front, Iranian President Masoud Pezeshkian discussed mediation efforts and regional developments during a meeting with Pakistan’s army chief, field marshal Asim Munir, in Teheran, Iran’s Nournews reported on Tuesday.
Among other metals, spot silver steadied at US$57.95 per ounce, platinum rose 0.5 per cent to US$1,656.10 and palladium was little changed at US$1,102.13. REUTERS
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