Gold steady above US$1,800 as US inflation raises doubts on Fed taper timeline

[BENGALURU] Gold prices held above the key psychological level of US$1,800 as the dollar and bond yields came under pressure after a tamer-than-expected rise in US inflation led to uncertainty on when the US central bank will begin tapering its asset purchases.

Spot gold was steady at US$1,802.86 per ounce, as of 1.20am GMT on Wednesday, having hit a one-week peak of US$1,808.50 in the previous session.

US gold futures eased 0.2 per cent to US$1,803.80.

Consumer Price Index (CPI) was up just 0.1 per cent last month, compared with an expected increase of 0.3 per cent. That was the smallest gain in six months suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.

The data has thrown a shade of uncertainty over the Federal Reserve's (Fed) taper timeline. The Fed will hold a two-day monetary policy meeting next week.

The CPI data weighed on the dollar index, while the benchmark US 10-year yield hit its lowest reading since Aug 24.

Lower yields reduce the opportunity cost of holding the non-interest bearing bullion.

Japanese manufacturers' confidence worsened to a five-month low in September as the fallout from the latest wave of Covid-19 put fresh pressure on the world's third-largest economy, the Reuters Tankan poll showed.

Silver fell 0.1 per cent to US$23.81 per ounce.

Platinum hit an over nine-month low of US$930.85 and was last down 0.4 per cent to US$935.60.

Palladium was flat at US$1,979.16. Prices touched their lowest level since July 2020 at US$1,935 in the previous session.

REUTERS