Gold prices inch up as US dollar eases

GOLD prices edged higher on Wednesday (Apr 19), helped by a softer US dollar, while traders assessed prospects of the Federal Reserve raising interest rates just once more in May before pausing.

Spot gold was up 0.1 per cent at US$2,006.09 per ounce, as of 0023 GMT. US gold futures eased 0.1 per cent to US$2,018.20.

The dollar index was slightly lower, making gold less expensive for buyers holding other currencies.

The US central bank should continue raising interest rates on the back of recent data showing inflation remains persistent while the broader economy seems poised to continue growing, even if slowly, St Louis Fed president James Bullard said on Tuesday.

But Atlanta Fed president Raphael Bostic said the US central bank probably has one more rate rise ahead of it.

The CME FedWatch tool shows that markets are pricing in an 83.2 per cent chance of a 25 basis-point hike in May.

Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates dim the non-yielding asset’s appeal.

Meanwhile, the European Central Bank’s (ECB) chief economist backed a further rate increase at the ECB’s next meeting but said its size would depend on incoming data, especially a survey of eurozone banks.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.16 per cent to 924.25 tonnes on Tuesday from 925.70 tonnes on Monday.

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Gold flat as investors await clarity on Fed policy

Spot silver edged up 0.1 per cent to US$25.23 per ounce, platinum was 0.1 per cent lower at US$1,081.66 and palladium gained 1.2 per cent to US$1,627.03. REUTERS