Gold at three-week lows as dollar, bond yields stay elevated

GOLD prices lingered at a three-week trough on Thursday (Oct 20), pressured by rising US dollar and Treasury yields amid worries that the Federal Reserve will persist with sharp rate hikes.

Spot gold inched down 0.1 per cent to US$1,627.04 per ounce, as of 12.49 am GMT. Prices earlier hit their lowest level since Sep 28 at US$1,624.98.

US gold futures were down 0.1 per cent at US$1,632.60.

The dollar index held steady, having risen 0.8 per cent on Wednesday, while the benchmark 10-year Treasury yields hit a peak since mid-2008.

US economic activity expanded modestly in recent weeks, although it was flat in some regions and declined in a couple of others, the Fed said on Wednesday in a report that showed firms growing more pessimistic about the outlook.

With latest data showing inflation continuing to run at more than three times the central bank’s 2 per cent target, the report may do little to temper expectations for a fourth straight 75-basis-point rate hike next month.

While gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the bullion, which yields nothing.

Eurozone consumer inflation was marginally lower in September than estimated earlier, data showed on Wednesday, but still at a record high, underlining market expectations of more rate rises before the end of the year.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 6.08 tonnes on Wednesday, their biggest one-day outflow since July.

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Gold prices edge lower on steady dollar, Fed rate-hike jitters

Spot silver fell 0.4 per cent to US$18.36 per ounce, platinum dropped 0.6 per cent to US$878.52 and palladium slipped 0.6 per cent to US$1,988.78. REUTERS