Gold steady as tepid US dollar counters rate-hike woes

GOLD prices were steady on Tuesday (Oct 18) as the dollar faltered, although risks from looming aggressive interest hikes by the US Federal Reserve limited gains in zero-yielding bullion.

Spot gold held its ground at US$1,651.75 per ounce, as of 1.18 am GMT.

US gold futures were down 0.3 per cent at US$1,658.30.

The dollar index was flat in Asian hours, having fallen 1 per cent overnight, while benchmark US 10-year Treasury yields also eased.

Inflation in the United States is “very stubborn” and the Federal Reserve should “stay the course” and tighten monetary policy or else lose credibility, said Gita Gopinath, the International Monetary Fund’s first deputy managing director.

A fourth straight 75-basis-point Fed interest rate hike is expected next month after data last week showed inflation increasing strongly in September.

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

The German government is aiming to cushion an expected recession with its investment programmes, but without fuelling inflation, Economy Minister Robert Habeck said on Monday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.22 per cent to 939.10 tonnes on Monday.

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Spot silver rose 0.1 per cent to US$18.71 per ounce, platinum was 0.3 per cent higher at US$918.00 and palladium gained 0.4 per cent to US$2,008.97. REUTERS